Investors have for years watched the U.S. Federal Reserve for information about where global markets are headed: The decisions made by the American central bank influence assets around the world.
Increasingly, however, markets are also focusing on changes out of the world's second-largest economy, attempting to analyze its policy decisions to understand how vast flows of Chinese funds will react.
But the Federal Reserve system is quite unlike China's economic policy regime.
When it comes to where money is headed within the U.S. economy, investors watch for changes that the Fed makes to its target for the "federal funds rate" — the interest benchmark that influences borrowing costs, asset prices and exchange rates in the American economy. In China, such a signal is less clear because the country doesn't have a single representative policy rate like the Fed's.
Instead, the central bank uses multiple tools to control interest rates and the amount of money in the Chinese economy. So, interpreting what China wants to achieve can sometimes be a confusing affair.
Chinese policymakers also frequently add new tools or retire older ones as they modernize their country's system into something more aligned with those in developed countries. Keeping track of those changes can add to the difficulty of reading the central bank's signals.