On the face of it, the miserable state of the global economy makes it seem odd that any central bank might be characterised these days as hawkish. And yet that is not a bad description of the People’s Bank of China. There are some nerdy technical reasons for this. Yet there is a bigger picture, too: call it the geopolitics of monetary policy.

As China’s revolutionary leader Mao Zedong put it when discussing guerrilla warfare tactics in the 1930s, “when the enemy advances, we retreat”. In 2020, it seems increasingly clear that as the Federal Reserve advances, the PBoC retreats.

To be sure, China’s central bank loosened monetary policy in a fairly decisive way when the country’s economy first slumped under the burden of lockdown. Market rates fell sharply and the pace of credit growth accelerated. To that extent, it followed a common playbook.