China's Efforts to Boost Economy Could Worsen US Inflation, Slow Fed Rate Cuts

• China boosting manufacturing to shore up economy could put upward pressure on US inflation and delay Fed easing • Credit flows accelerating to Chinese factories; shift in rhetoric to industrial policy • Short-term boost to growth could raise commodity and intermediate goods prices, weaken dollar • Would "tilt the balance of risks for US inflation to the upside," possibly delaying expectations for Fed rate cuts • Alternative scenario of Chinese property slump could reduce US growth and inflation