A quick note on China's macro data

CHINA ADVISORY - Report 20 Apr 2022 by Andrew Collier

China has issued a flurry of policies designed to rejuvenate the economy – a 25-basis-point RRR cut last week, 23 bank-focused policies Monday…What is unusual is how restrained the reaction has been. Between lockdowns, Covid, the Ukraine situation, continued friction with the U.S, and the tech crackdown, the PBOC and State Council appear reluctant to inject the stimulus that western analysts have been expecting since December.

The 23 policies issued Monday are particularly weak. Instead, the real support is coming through bond issuance to local governments and their proxy companies, the LGFVs. Relying on local bonds is a neat political solution. It adheres to the government’s desire to prevent a bubble/financial crisis while avoiding responsibility.

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