Wang Qishan, vice-premier of China, warns that the euro crisis will "certainly" lead to a long-lasting recession ahead. If this is what it takes for Beijing to relax its monetary policy, the disease might end up worse than the fiscal "cure."
Traders were already nervous enough about the impact of any cut-off in European demand for Chinese products before Wang made his comments over the weekend:
"The global economic situation is extremely serious and in a time of uncertainty the only thing we can be certain of is that the world economic recession caused by the international crisis will last a long time."
This was quoted in the state media, so should be a pretty good indicator of what the party elite are thinking these days.
It is definitely a huge shift from the hawkish "kill inflation at any price" stance that Wang's immediate superior, Wen Jiabao, was taking barely two months ago .
Where Wen argued that Beijing was willing to tolerate slower economic growth in order to control prices, Wang now worries that the opposite policy stance needs to be put in place.
Beijing needs to be "forward-looking, targeted and flexible," he says.
We have been looking for stimulus for awhile now .
But traders are unlikely to rejoice if it comes at the cost of an economic breakdown. Maybe Wang is just being mistranslated somewhere.