China’s economic policymakers announced this weekend at their central economic work conference that they would “prioritise overall price stability”, after an ugly surprise as inflation hit 5.1 per cent. Activity data suggested an overheating economy. But by the day’s end, the central bank had not followed up by raising lending rates.

Markets will probably greet this as good news and an excuse for some more “risk on” trading but it should cause concern. It suggests that China is stuck in command-economy mode. Its leaders recognise that inflation is well above target, while industrial output growth accelerates, showing that capital is priced inefficiently. Official policy shifted this month from “relatively loose” to “prudent”. Yet all China wants to do about it is continue rationing by tightening banks’ capital requirements.

The People’s Bank of China has tinkered with reserve requirements incessantly. Friday’s increase to an 18.5 per cent ratio was the sixth such rise this year and makes it higher than at any point in the last inflation cycle. But all this year’s “tightening” has failed to stem inflation, which is unsurprising as banks are awash with cash after the drastic stimulus of two years ago.