Worries continue to swirl around the Chinese and global economies, but the news from China in the third quarter of 2011 was basically positive: Inflationary pressures eased while growth slowed only slightly. Moreover, surface indicators of the health of China’s financial system remained stable and even improved slightly. These developments took some of the pressure off policy-makers, and opened up new space for policy adjustment and innovation. This has allowed China to make some adjustment around macroeconomic policy, loosening it slightly. However, large shifts in macroeconomic policy—of the sort expected by some in the global investment community—are not likely to occur soon. The overall economic environment is still challenging, and there is increasing evidence of complex interactions among different parts of the financial system, interactions that may not be fully understood. Moreover, today’s policy decisions are intertwined with important personnel changes. In fact, the man most responsible for the improvement in the financial health of China’s banks has just stepped down. The retirement of Liu Mingkang, head of the China Bank Regulatory Commission, may have profound consequences for the Chinese financial system.