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China’s crisis could set its bond markets free

TOKYO – As China scrambles to stimulate growth, it’s comforting to see Chinese Premier Li Keqiang internalizing – apparently – the works of Milton Friedman.

How so? By recalling the Nobel Prize-winning economist’s edict that a crisis is a terrible thing to waste.

This week, Li called on local officials in six key provinces to take bold action to put a floor under China’s economy. These six regions — which drive 40% of gross domestic product (GDP) — are precisely where Beijing should be looking as growth flatlines. Output and consumption are cratering amid Covid lockdowns and sliding property values.

Li wants local governments to increase debt issuance programs “reasonably,” to act “according to law,” while new construction projects should prioritize “sound” fundamentals.

But it is not just Friedman whom Li is channeling.