China’s road to recovery is not going to be as straightforward as many suppose. Estimates suggest second-quarter growth data, due out on July 14, could see the economy bounce back anywhere between 5 per cent and 15 per cent, following the 6.8 per cent fall in the first quarter, on the strength of a rebound in domestic demand. The question is whether any rebound is sustainable. There’s still a big black hole in global demand which underlines why China’s exports are struggling and will continue to do so for a long while. Beijing will need to shore up the domestic economy with more fiscal and monetary reinforcement as it braces against the global downturn , rising protectionism, continuing pandemic risks, the emerging market debt crisis, November’s US elections and an impending hard Brexit shock. China is not out of the woods by a long stretch, and a major policy push will be needed to nurse the economy back to full strength. The US elections could pose a major hurdle for global economic confidence, especially if US President Donald Trump decides on “getting tough with China” as the rallying cry for his 2020 re-election campaign. The longer the US-China trade war drags on, the greater the risks for all involved. Meanwhile, the new waves of coronavirus infections in Beijing and New Zealand, for example, are a vivid reminder of just how fragile things are. The road to recovery from the pandemic will be long, arduous and uncertain. Until there is an infallible coronavirus cure, the world will worry, economic confidence will falter and recovery hopes will fade. The risks of a deeper recession and deflation will remain. If Beijing is counting on recovery abroad to bail out its economy, it needs to think again. Everyone is in the same boat, struggling to fire up economies against the odds. It would be fine if multinational accord was working well and the major industrial nations were pulling together with the same pro-cyclical intentions, but international divisions have left global policy coordination in tatters. The US-China trade war, Trump’s single-minded commitment to “America first” policies and the marginalisation of major supranational bodies such as the International Monetary Fund and the World Bank have left the world seriously disadvantaged. Without a coordinated, concerted push for monetary and fiscal reflation, a self-sustaining global recovery may not happen. The Organisation for Economic Cooperation and Development’s June forecasts make for grim reading, with a projected negative 7.6 per cent global growth in 2020. As the global economy faces stronger headwinds, the United States, Europe and Japan could all end up with double-digit negative growth rates for this year. The possibility of significant event risks, such as a hard Brexit or a major credit default in heavily debt-laden emerging markets, could trigger an even bigger meltdown in global economic confidence and world trade flows. The message is clear – China needs to forget about export-led recovery and go for growth on the home front . That means an even bigger fiscal reflation and a greater monetary push than it has delivered so far. It implies more deficit spending, a bigger budget deficit and more government debt issuance. It also requires lower interest rates, easier lending conditions for borrowers and a bigger domestic debt pile. These are extraordinary times requiring special measures, and Beijing should not shy away from bold decisions. It could take until 2022 or longer to get growth back to trend even with maximum policy stimulus from here. China’s economy is easily capable of 6 per cent to 7 per cent annual GDP growth, but only through greater domestic stimulus measures. Double-digit monetary growth and government spending above the rate of inflation will be needed to strengthen consumer optimism, pump up business confidence and rally domestic growth potential in the process. Domestic credit expansion is moving in the right direction, but the government still has plenty to do to ensure fiscal conditions remain positive for long-term growth. Improving trade relations with Washington will help boost exports, but Beijing’s highest priority right now should be ensuring sustainable recovery at home. David Brown is chief executive of New View Economics