Trump’s trade war may be spurring China’s growth strategy, and was probably the reason for the delayed fourth plenum. A modern manufacturing sector seems likely to top the agenda for policymakers, given comments from President Xi and moves to channel capital away from the property market.

China pushes ahead with deleveraging and tightening standards to avoid systemic risks, while the US seeks stimulus. These approaches appear opposite, but both are about girding up to maintain an advantage in the trade war.

Concern over capital outflows, the need to deleverage and Beijing’s independent monetary policy mean the PBOC won’t cut rates, even as economic worries encourage other central banks to do so.

Since May, when the tiny Baotou-based bank prompted regulatory intervention, bigger financial institutions have had reason to question whether smaller counterparts are worth the risk.

Should Beijing weaponise the yuan or offload its US Treasury holdings to retaliate against Washington? Probably not. Such measures either make no economic sense or might backfire on China.

While China’s central bank has denied that a big monetary policy change is in the offing, recent signals from officials suggest that the days of accommodative policy are coming to an end.

As pressure grows on China’s leaders to increase funding for small and medium-sized enterprises, it’s the right time for the People’s Bank of China to scrap its benchmark rates and let market-based interest rates be the new anchor.

Beijing is taking extensive measures to stabilise the economy, through the central bank, local governments and an enormous tax-cut package. Already, some indicators seem to be responding to stimulus, which bodes well for global trade.

The Chinese central bank’s new policy tools are clearly meant to encourage banks to extend credit to small businesses. It is a striking change in policy direction, after years of focusing on state-owned enterprises.

With Beijing still struggling to control the debt that swelled as a result of its 2008 rescue package, it has no appetite for more debt-fuelled stimulus. One way to increase domestic demand is to reduce the tax burden.

Beijing is willing to pay the price to ease trade tensions with Washington and buy more time for economic development. But unresolved issues between the two sides mean the trade dispute may not go away in 90 days.

The ‘very good conversation’ on trade between the US and Chinese presidents has eased market fears. However, the market is hesitant to take the US president too seriously, and the Chinese currency’s outlook remains uncertain.

The outlook for the Chinese economy is weak, as consumption falls and the deleveraging campaign stalls. Chinese policymakers need to come up with longer-term solutions and convince the market of China’s commitment to economic openness.

While history and recent moves by the People’s Bank of China indicate the country will prop up the yuan, the currency is unlikely to appreciate significantly any time soon.

Chinese policymakers torn between spurring growth and pushing financial deleveraging should first differentiate bad debt from good – they should reform the state sector, but also provide help to ease companies’ cash flow.