Maybe I was wrong.

That’s happened once or twice. Three times even. Four at most. (“Not funny,” said dozens of people who knew me in a past life.)

I spent a good part of last year and, now that I think about it, the year before that, criticizing Beijing’s stimulus approach as too piecemeal to be effective considering the endemic nature of China’s macro malaise.

Xi Jinping’s decision to collapse the nation’s property bubble and knee-cap Chinese big-tech in the name of “common prosperity” undermined household sentiment and depressed domestic demand, forcing Beijing to lean into exports to prop up growth. It didn’t help that Xi clung to 2020-style COVID containment protocols two years after the mRNA vaccines became widely available.

Long story short, China was — and still is — facing a balance sheet recession. Concerned households want to retrench, which means monetary policy will be less effective. When no one wants to borrow, the price of money and credit’s irrelevant.

Fortunately, China had — and still has — plenty of fiscal firepower. At the federal level, the county’s not especially indebted. The local level’s another story entirely, but I won’t venture down that rabbit hole here.

And yet, rather than deploy fiscal stimulus aggressively, China delivered rate cuts (monetary stimulus) in dribs and drabs, to lackluster effect. Both headline and core inflation are moribund and retail sales have struggled to print the kind of growth investors were used to seeing pre-pandemic.

Finally, in late September, the Party got serious about deploying fiscal and monetary measures in tandem, triggering a monumental local stock rally. Then, predictably, the euphoria faded as officials failed to follow up with specifics sufficient to meet market expectations.

I have serious reservations about ascribing that apparent ineptitude to a forward-looking strategy which anticipated Donald Trump’s return to the Oval Office. Rather, I think China was exhibiting policy paralysis in the face of structural macro problems, and I think they reverted, instinctually, to overproducing and foisting their overcapacity on the rest of the world to keep up appearances on the growth front.

But now that Trump’s back, and given what he’s doing, Beijing looks a semblance of prescient. You could argue, if you were inclined, that Xi ran up the score on the trade front while he could, saving the stimulus bazooka for a scenario in which Trump makes it impossible for China to export its way to 5% annual growth.

And so it was that China on Wednesday, 72 hours ahead of opening trade talks with the US in Geneva, rolled out a fairly aggressive package of stimulus measures, including a cut to the seven-day reverse repo rate and an RRR cut.

The figure above gives you some context, although… I mean, look, I’m not under any delusions. I know none of you care exactly where each of these rates are, which means the chart’s superfluous, but it’s a nice decorative touch. And it breaks up the monotony of the text. Note that RRR’s plotted by itself, on the left axis.

As a quick, technical reminder: The PBoC last year began deemphasizing the rate on medium-term bank loans (one-year MLF) which previously served as the reference for consumer lending (the one- and five-year loan prime rates) in favor of the seven-day repo rate, which is now the de facto policy rate. RRR is a less convoluted tool: It’s just the amount banks have to hold in reserve.

Those cuts — Wednesday’s reduction to the seven-day repo rate and the RRR reduction — are the first since the above-mentioned September stimulus blitz, and they were accompanied by a dizzying array of additional easing including reductions to PSL rates (PSL’s a QE-esque facility available to the state banks) and easier terms and expanded quotas for all manner of relending tools and support mechanisms. You can expect cuts to the one-year MLF rate and both LPR tenors later this month.

China can do this all day. Whether it’s effective or not’s another matter. The point is just that they have a thousand policy levers, and everyone who pulls them is just an extension of Xi. It doesn’t even make sense to say, as people tend to, that unlike Jerome Powell, Pan Gongsheng can’t tell Xi Jinping “no.” That’s like saying my right arm couldn’t tell my brain no if it wanted to. It’s true, but it doesn’t rally capture the nature of the relationship.

Let me dwell on that point for a moment, because it’s important. Pan, like all the rest of them, is a card-carrying, committed apparatchik, and the PBoC’s an organ of the Party. Yes, they’re “beholden” to Xi, but they also are Xi, in the same way that Xi “are” the Party. That nods to a reality that I don’t think Trump fully appreciates: He’s fighting an emotionless monolith here.

There’s a sense in which Pan, He Lifeng, Wang Yi, etc. are inhuman. Not in the normative sense of the term, but in the sense that these people don’t have any agency. They’re just biological extensions of an ideology.

Sure, Scott Bessent will be talking to a person called He in Geneva on Saturday, but that doesn’t really mean anything. Sundry Hes, Lis and even Xis, are all just mannequins programmed to respond to stimuli by paraphrasing the Little Red Book.

So, you know, good luck Scott. Good luck, Don. All you’re going to get from these people is a bunch of nebulous, Mao-themed persiflage.