While consensus forecasts for China in 2022 are modest, Beijing is in a much healthier financial position than Washington and can afford more stimulus this year. When US financial credibility is looking overstretched, Chinese inflation is more subdued and there is room for more interest rate cuts.

As global growth slows, the US must increase government spending and taxation, while China can pick up the remaining slack through heavier investment spending. Most importantly, a return to strong US-China bilateral trade would do much to restore economic confidence.

A new Covid-19 variant, rampant inflation, a financial crash and climate disasters are just some of the potential crises that could sink tentative global recovery. Overstretched governments and central banks cannot afford to be complacent.

Diverging policy priorities in Washington and Beijing and the looming prospect of interest rate increases could put the renminbi under pressure. There is a strong argument for another big push in fiscal stimulus to plug persistent gaps in demand.

The world has suffered too many crash and pandemic misfortunes, and needs interest rates at the right level to deal with future shocks. Central banks aren’t targeting output, inflation and jobs so much as trying to normalise rates for better monetary traction.

If the Fed succumbs to pressure to act quickly on inflation, higher interest rates will emerge in the US and spread across the globe. Even if gradualism wins the day, though, the days of easy money and low interest rates are almost certainly coming to an end.

Supply-side logjams, rising inflation and the Omicron Covid-19 variants are headwinds to global growth. China and Germany are well placed to benefit once normal business conditions return, but keeping monetary and fiscal policy conditions loose will help fuel domestic consumption in the interim in China at least.

Trade must be high on the agenda for both countries as economic growth and the benefits of easy money grow steadily weaker. Global growth prospects are in urgent need of a reboot, and renewed US-China dialogue could pave the way for changes.

If 2021 has marked the year of the supply chain crisis, 2022 could easily end up as the year of oversupply. Amid volatile inventory cycles and uncertain demand conditions, central banks must be careful not to upset the markets with gratuitous rate hikes.

Growth has slowed to 4.9 per cent and housing market confidence has been hit hard by the Evergrande crisis, but the economy will speed up again as the global recovery gathers pace. Beijing’s growth target is within reach, but the economy will rely on export drivers.

While GDP rebounded by 5.5 per cent in the second quarter, there are already signs that retail activity is cooling. A major risk is that government measures introduced to kick-start the pandemic-hit economy will be withdrawn to get public-sector finances back into shape.

A return to tougher monetary policy is not the answer as higher inflation this year will subside in 2022. This is a different world from the high inflation 1980s when annual consumer price rises reached 14.6 per cent in the US and interest rates surged to 22 per cent.

Biden’s quest is to ensure more US economic demand is met domestically without further inflaming tensions with China. Unemployment is falling and long-term growth prospects are looking up, but there is still much to do to lure lost productive capacity back home.

The rise in oil and natural gas prices shouldn’t be a precursor to a supercharged inflation surge, and there is no reason for central banks to hit the panic button. Instead, the spike in prices could be a blessing in disguise if it hastens the switch to a zero-carbon world.

Recent Chinese economic data and global trade figures are an early warning signal that global recovery is slowing in the face of several lingering problems. China should not turn to much looser monetary policy to get faster results, given that fiscal expenditure can be increased without great damage to government finances.

The property giant’s woes reflect lingering global problems with excess leverage and paltry regulation. Policymakers worldwide should be intervening more with tougher regulation, greater prudential oversight and improved transparency to ensure global stability.

The rise in US CPI unexpectedly slowed in August, which will ease pressure on the Fed to cut short its support for the US economy earlier than planned. Given the pandemic’s lingering impact on demand and the global supply chain, inflation is unlikely to wreak havoc the way it did four decades ago.

The long-term damage from the pandemic, nagging economic uncertainties and rising credit default risks mean major industrial nations could be stymied on tighter policy for some time.

Economic confidence is high, employment conditions are bouncing back and retail spending is rebounding. But scratch beneath the surface and it’s a different story.

Despite a slowdown, the economy can still level out at around 6 per cent growth in the next few years. But Beijing needs to keep consumer confidence pumped up with more fiscal stimulus if it wants consumers to lead a growth surge.

The economic slowdown is consistent with longer-term trends of the GDP stabilising to a more sustainable 6 per cent growth. There’s no need for Beijing to panic – it has done enough and anyway can ill-afford to cut rates just when the Fed is expected to tighten policy.

If Beijing wants to win wider confidence in the yuan, it has a major hearts and mind campaign on its hands. The crackdown on China’s hi-tech sector will not help in the short term but, with the right market-friendly policies in place, the yuan’s future is bright.

Judging by the hints coming from British policymakers, the countdown to higher global interest rates seems to have begun. The perception is growing that the Fed is already behind the curve and that some pre-emptive tightening in US interest rates is overdue.

With US President Joe Biden’s Build Back Better programme and Beijing’s dual circulation strategy, both countries are looking inward to boost economic growth. But without both countries working in concert, the recovery risks exacerbating global imbalances.

Given the recovery in world trade growth this year, if the US, China and Europe can strike a deal to stop the slide towards global protectionism and boost opportunities for freer trade, markets could rocket.

Bond market bulls who have seen yields in retreat for the past 40 years should brace for a new phase, following the global growth recovery, inflation surge and imminent end to easy money.

While the dollar outlook has been cloudy in the recent years, it is fighting back, thanks to tougher interest rate tightening expected from the Fed and a brighter political climate under US President Joe Biden.

With growing discord over wealth disparities, hostility towards Brussels over the bungled Covid-19 vaccine roll-out and populist tendencies bubbling under the surface, there is a palpable sense of political divisions opening up again.

Despite their differences, both the US and China will rely on consumer-led recovery to forge stronger growth in the next few years. Keeping consumers upbeat is vital, and a return to austerity should be avoided at all costs.

The panic over inflation risks should stop. The world is simply moving from a state of near deflation towards higher inflation, as price setters make up for lost time due to the pandemic.