Production Curbs: Back to the Future

Recent government rhetoric suggests that Beijing will ease enforcement of production quotas and limits on heavy industries this year, in order to maintain GDP growth. Ever since late 2016, these supply-side restrictions have profoundly impacted the economy. Relaxing them now will boost output while demand is still softening, producing surprising disinflationary pressures in heavy industries. Easing controls significantly will also raise new questions about Beijing’s commitment to its long-term decarbonization objectives.

Posted February 15, 2022
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