Last week’s actions by the Chinese authorities mark a major short term stimulus for the domestic and global economies. The coordinated action by the monetary and fiscal authorities comes amid a slowing growth profile and a period of deflation over the past year. Within an economy with high levels of debt across many sectors, particularly real estate, a prolonged period of deflation would be particularly painful for highly-leveraged Chinese households and businesses. The Government’s actions are also an admission that it is now at risk of missing its 5% GDP growth target by a significant margin this year.