China’s central bank is trying to save the economy and the stock market

Aand China’s economy descended into deflation, the central bank’s lack of urgency was a source of frustration. Officials of the People’s Bank of China (PBac) initially expressed confidence that deflation was, so to speak, transitory. When it persisted, they worried less about falling prices than about the side effects of fighting them. They were reluctant to ease monetary policy decisively because China’s currency was too weak, bank profit margins too thin, and bond yields too low.