Just as it was starting to look like China might try and see if its economy could stay afloat without massive fiscal and monetary stimulus, this now seems to be off the table.
Chinese Commerce Minister Chen Deming latest comments don’t give much indication of tightening.
“The Chinese government will continue to implement a proactive fiscal policy and a moderately easy monetary policy,” he added.
“There are still a lot of uncertainties in the world economy. Therefore we believe it is too early for us to talk about an exit strategy from our stimulus package,” Chen told reporters after a meeting with European Union (EU) Trade Commissioner Karel De Gucht.
Europe’s the largest uncertainty there is right now. Moreover, a plummeting euro has put pressure on Chinese exporters, thus also hurting the chances of a yuan hike. Europe just gave China another excuse to keep putting off hard decisions.