Allegedly, China’s economic recovery was going so well last month that Party officials were taken aback, and considered adopting an ambitious growth goal for 2023.

But, just days after anonymously-sourced media reports flagged internal optimism, China decided on an underwhelming target+ at the National People’s Congress, disappointing markets and casting considerable doubt on a sunny narrative which grew, like a rose from concrete, out of the macabre situation that prevailed in late December and early January, when the abrupt abandonment of COVID containment protocols allowed the virus to sweep the nation.

Lost in the melee of Western banking crisis headlines Friday was a PBoC RRR cut, the first since December. The move was interpreted as a sign of official dissatisfaction with the pace of the domestic economic rebound. In the normal course of business, I’d have mentioned it as it happened, but frankly, nobody would’ve cared on Friday morning in the US and Europe — the banks were burning, after all.

The 25bps reduction is effective from March 27, and will free up quite a bit of long-term liquidity. But, in an amusing riff on the bank’s traditional caveat about avoiding the sort of monetary tsunamis that’ve come to define Western policy interventions, the PBoC said it won’t resort to “flood irrigation.”

One way or another, it’s obvious China intends to stick with an easing bias, even if it’s incremental.

Recall that Xi decided to retain Yi Gang as central bank governor, a surprise move apparently aimed at ensuring stability, although it’s impossible to know what, exactly, prompts decisions to reappoint (or not) Party officials during government reshuffles.

The January-February activity data rollup came in so close to consensus this week that the numbers scarcely merit mention — which is why I didn’t mention them. Retail sales and industrial output rose 3.5% and 2.4%, respectively, over the first two months of 2023 versus the same period a year ago. The retail sales print matched consensus precisely, which I found comically far-fetched. The factory output print was a bit short of the mark, which likely means the actual situation is considerably worse.

Fixed asset investment topped estimates, residential property investment fell almost 5% and the jobless rate ticked up, with youth unemployment rising to more than 18%.

Taken together, the data suggested the recovery is a halting affair at best, and faltering at worst, which explains the RRR cut. I doubt seriously the PBoC was responding to turmoil in the Western banking system.

On Saturday, China reported trade figures for February, when imports jumped 4.2%, recovering from a multi-month string of declines, including a 21% drop in January.

Exports, meanwhile, fell 1.3%, anemic to be sure, but much better than January’s reported 10.5% decline.

Regrettably, I’m compelled to parrot the boilerplate narrative. The jump in imports is an ostensible sign of recovering domestic demand and appetite for commodities. Weak exports are, almost by definition, indicative of weaker external demand, a situation that could worsen depending on the extent to which policy tightening across the Western world curbs growth and/or banking sector issues facilitate downturns.

Western officials are obviously keen on what, exactly, China is exporting (and importing), and where it’s going (and coming from). Xi and Vladimir Putin have made a show of their “rock solid” bilateral relationship recently, and Xi is due for a state visit in Moscow next week. Some have touted a Russia-China commodities nexus as a key pillar of any new geostrategic regime centered around regionalized trade and finance. The Biden administration is convinced that Chinese entities, including SOEs, are supplying Russia with so-called “dual-use” technologies that are finding their way to the battlefield in Ukraine.

In any case, the generic takeaway from China’s RRR cut, as well as the balance of the data, is that the world’s second-largest economy isn’t booming. And that’s not the best news at a time when the specter of a banking crisis haunts developed markets.