While Beijing may breathe easier now than in 2018, global conditions remain uncertain, meaning China should hasten reforms to strengthen the yuan’s position as a reserve currency, to challenge the dominance of the US dollar.

While a trade deal between the US and China will offer a reprieve, US President Donald Trump’s attempts to protect the American automobile industry will have global ramifications, including on a Europe reeling from Brexit uncertainty.

As China’s economy slows, in addition to loosening monetary policy and investing in technology to counter the impact of its falling birth rate, the country must strengthen welfare provisions, such as health care, to bolster consumer confidence.

The Fed’s decision to stop interest rate rises and the shrinking of its balance sheet this year should be a cue for central banks in Europe, Japan and particularly China to take steps to bolster economic activity.

From out-of-control US deficits to Europe’s sluggish growth and China’s over-reliance on exports, the world has problems it will take cooperation to address, and the trade war is a big distraction.

The fear of hyperinflation after the global financial crisis proved to be overblown. Instead, today, there’s the opposite problem: sluggish inflation means advanced economies risk the ‘Japan syndrome’.

Confusion reigns in global markets, as world growth and even US manufacturing slow. But the US president’s eagerness to achieve a breakthrough with China should not be underestimated, even as dark clouds surround his presidency at home.

The trade war has taken its toll on export-led nations such as Germany, Japan and China. With indications that even the US economy is losing steam, it’s time for central banks to pick up the slack.

The comforting numbers, rose-tinted projections and all-round positive spin that Beijing has been feeding the public have to stop. The Chinese economy is in trouble and policymakers must take radical action to stop the rot.

Economic worries suggest Beijing will come under pressure to commit to fiscal intervention, which would be likely to widen the spread between Chinese and US bonds.

Beijing has a choice: blow its foreign exchange reserves on stabilising the renminbi or let it reach equilibrium on its own. The latter would be the better choice in the long term.

Germany’s slide towards recession and Italy again threatening a revolt could mean big trouble for China’s economy, even if the trade war is resolved.

The yuan has a gap to fill as the dollar’s share as a reserve currency slips and concerns about the euro’s future persist. However, market liberalisation and a hands-off approach to the currency in China are crucial.

China must start treating the unthinkable – economic growth slumping to just 2 per cent – as entirely possible and ramp up the stimulus measures.

Amid a shift in global economic power from west to east, the US economy is buoyed by policies that compound its budget and trade deficits. Without a radical overhaul, a downturn in the economic cycle will have a devastating impact.

There are hopeful signs for markets, despite the current confusion. The Federal Reserve can always be counted on to stabilise the world economy, the Democrats are leading the House and Trump might just do the right thing and quit.

Concerns are growing around the world about slowing growth, and only Beijing – not Britain, Japan, the EU or even the US – are in a position to revive economic hope.

With indicators turning negative and austerity the norm, investors may be well-advised to liquidate and remember that cash is king.

On top of China’s slowdown, there are signs of looming trouble for the US, so Beijing needs to turn on the stimulus spigot now.

There’s no reason for Beijing to hold back from doing what’s necessary to boost its economy when the inflation outlook is tame and monetary growth modest, amid a soft global economy.

Slowing growth means China has two choices: resolve tensions with the US or prime the pump. Since there’s no reason to believe Donald Trump will come to the rescue, government stimulus is the only answer.

The two economies are so intertwined that when one falters, so, eventually, will the other. There is a way to address both their needs without coming to blows, and Beijing and Washington must put their minds to finding it.

The Chinese economy needs a stronger dosage of government intervention, or growth may slow to under 5 per cent next year. Beijing must expand the money supply, and ease credit conditions for households and companies.

An adverse midterm election for Trump could see the US president push for a weaker dollar, resulting in a currency war that would rattle markets, while a weaker yuan will intensify the Chinese economy’s focus on exports, in contrast to Beijing’s intention of concentrating on domestic consumption.

David Brown says while markets appear to be blowing off steam, global growth has held steady, the US economy is doing well and China is still recording a 6.5 per cent expansion.

China has many economic weapons, while America’s growing budget deficits and trade gaps are getting worse, not better

While a more decisive interest rate cut would be beneficial now, what China’s central bank really needs is more transparency in monetary policy and less government dictation.

There are signs that the US dollar’s dominance as a reserve currency asset has been waning but, for the renminbi to fill the gap, China must run a truly independent foreign exchange and monetary policy.

In the face of global headwinds, China’s policymakers could consider cutting interest rates, slashing taxes and increasing spending to keep the economy on course.