The People’s Bank of China has cut its benchmark interest rates.  This unerscores the focus of the government’s stabilization policy which aims to put a floor of 7% on GDP growth.

Structural pressures come from a shift in consumer-led services and consumer-led growth.  Cyclical pressures grw out of a global environment in which pressure has been placed on export and investment-led growth.

Xi Jingpeng is committed to growing the serivces sector and domestic consumption.  This is how the country will arrive at midle-income status.

China is switching to a morepeffective market based mechanism, but it has to avoid being derailed by a significant gorwth slowdown in the shortterm.

With the recent monetary easing, the Chinese authorities seem to be drawing a line in the sand to prevent an excessive drop in growth. This suggests that they now view a cyclical disruption as a real threat to the country’s longer-term structural-reform agenda. To the extent that those fears persist, additional monetary easing can be expected.