Why China’s central bank won’t save the country from deflation

Finance & economics | MarginaliaWhy China’s central bank won’t save the country from deflationIt’s not about the exchange rate any moreSharePhotograph: AP Feb 12th 2026|3 min readFOR DECADES Americans have fretted that China might dump its vast holdings of Treasuries, undermining the dollar. Global investors therefore snapped to attention when Bloomberg, a news agency, reported on February 9th that China’s regulators have warned commercial banks against holding too many American government bonds. Some banks have been told to cut their exposure. In response to the news, the dollar fell against China’s yuan and Treasury prices wobbled. Already have an account?Log in Continue with a free trial Get full access to our independent journalism for free Free trial Or create a free account to unlock just this article Create account Explore moreShareReuse this contentThe Economist TodayHandpicked stories, in your inboxA daily newsletter with the best of our journalismSign upYes, I agree to receive exclusive content, offers and updates to products and services from The Economist Group. I can change these preferences at any time.More from Finance & economicsAmerica’s welfare state is more European than you think State-level policies are making up for stingy federal provisionA viral research note on AI gets its economics wrongToo much of a good thingThe AI productivity boom is not here (yet)Artificial intelligence is improving fast. Its effect on output, not so much ButtonwoodMarkets are churning furiously beneath a calm surfaceAI is prompting investors to reassess every business model under the sunDonald Trump answers a Supreme Court rebuke with new tariff threatsThe immediate economic impact will be more uncertaintyThe EU is thrashing out a more muscular set of economic policies The bloc is done playing nicely