You know the drill: central bank cuts rates, a frisson of excitement ripples through stock markets – and credit still refuses to flow. Beijing, increasingly spooked by China’s decelerating economy, left nothing to chance in Wednesday’s moves. The 108 basis point cut in one-year benchmark lending and deposit rates is the most aggressive in more than a decade. Reserve requirements were also reduced, freeing up more money to be lent at cheaper rates.

It would be nice to think monetary policy works in China. Banks, after all, follow orders and play a bigger role in funding than in more developed economies. Even last year, a record for equity issuance, the $125bn raised represented a quarter of the amount raised through new bank loans. Alas, the track record is not encouraging. On the upside, nine rate rises worth a total of 189bp in the 38 months to the end of 2007 barely registered with borrowers. Money supply, using the broadest M2 measure, grew 16-18 per cent a year during that period. Now the economy is on the downswing, the Chinese have no more reason to spend than counterparts elsewhere; in many ways the situation is worse. Overcapacity lingers as exports wilt. Renewed political tensions over the French president’s planned meeting with the Dalai Lama, and Beijing’s tit-for-tat response, could further weaken Europe’s appetite for Chinese goods.