1/7
The head of the PBoC's monetary policy department lists the four main priorities for the PBoC this year as “to ensure steady credit growth”, “to optimize the credit structure”, “to bring down overall financing costs”, and “to keep the renminbi...
global.chinadaily.com.cn/a/202202/28/WS…
The head of the PBoC's monetary policy department lists the four main priorities for the PBoC this year as “to ensure steady credit growth”, “to optimize the credit structure”, “to bring down overall financing costs”, and “to keep the renminbi...
global.chinadaily.com.cn/a/202202/28/WS…
2/7
exchange rate generally stable at an adaptive, equilibrium level”.
The first three of these priorities are effectively a form of “window guidance”, similar to central bank policies in Japan in the 1980s.
exchange rate generally stable at an adaptive, equilibrium level”.
The first three of these priorities are effectively a form of “window guidance”, similar to central bank policies in Japan in the 1980s.
3/7
Their purpose is to ensure that the expansion of credit is enough to drive the amount of economic activity needed to meet expected growth targets (which I expect will be above 5%, probably 5.5%).
Their purpose is to ensure that the expansion of credit is enough to drive the amount of economic activity needed to meet expected growth targets (which I expect will be above 5%, probably 5.5%).
4/7
I suspect that many PBoC officials are concerned that these measures are likely to worsen China’s debt burden and perhaps exacerbate bubbles, but given the pace of the economic slowdown in such a politically important year, I don’t think anyone expects anything different.
I suspect that many PBoC officials are concerned that these measures are likely to worsen China’s debt burden and perhaps exacerbate bubbles, but given the pace of the economic slowdown in such a politically important year, I don’t think anyone expects anything different.
5/7
As for the last of these priorities, the PBoC is trying to convince investors that the RMB is no longer a one-way bet, but I expect financial inflows to continue to grow this year and trade surpluses to remain large, as China continues to find it hard to rebalance demand.
As for the last of these priorities, the PBoC is trying to convince investors that the RMB is no longer a one-way bet, but I expect financial inflows to continue to grow this year and trade surpluses to remain large, as China continues to find it hard to rebalance demand.
6/7
That means the PBoC will again have to choose between intervening and not intervening, i.e. letting the RMB appreciate too quickly and letting domestic money to expand too rapidly.
ft.com/content/a38c83…
That means the PBoC will again have to choose between intervening and not intervening, i.e. letting the RMB appreciate too quickly and letting domestic money to expand too rapidly.
ft.com/content/a38c83…
7/7
The first three priorities suggest that will allow more rapid expansion of money, so while I expect the RMB will continue to appreciate this year, it won’t do so at nearly the pace of the past two years. That still makes Chinese government bonds a good deal.
The first three priorities suggest that will allow more rapid expansion of money, so while I expect the RMB will continue to appreciate this year, it won’t do so at nearly the pace of the past two years. That still makes Chinese government bonds a good deal.
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