Up Up and Away, continued, continued, continued…


Xi Jinping and other Chinese leaders at the end of an annual closed-door conclave, promised more fiscal and monetary measures with the aim of supporting everything from consumption to infrastructure investment and employment in the coming year—all to ensure that the growth rate will be kept stable. “The downward pressure on the economy has increased,” with this year seeing “a clear increase in risks and challenges at home and abroad,” said a statement by the state-run Xinhua News Agency. because of its stimulus efforts during the past decade, debt levels in China reached a peak of more than 270% of its $13.6 trillion economy last year, according to UBS —a level that worried many policy makers and prompted them to intensify their campaign of tamping down asset bubbles and financial risks. Now, with the economy softening and U.S. trade tensions escalating, Beijing has been gradually easing up on those efforts and increasingly prioritizing raw growth. In 2019 alone, Beijing has cut taxes, pushed banks to lend more and instructed local authorities to front-load bond issuances in order to fund big-ticket infrastructure projects.

We’ve been following this for a long time, but they have yet to hit the wall.

4 Responses to “Up Up and Away, continued, continued, continued…”

  1. feeblemind Says:

    Sounds like more of the same, push infrastructure projects and pressure banks to lend more money.

    China doesn’t know what to do, so they will keep doing what they have done in the immediate past and hope for a different result.

  2. feeblemind Says:

    China plays by China’s rules. Bloomberg calculates Germany sold about 7 million autos to China last year.

    Chinese ambassador accused of threatening German car industry if Huawei is frozen out

    From the article:

    Diplomat Wu Ken warns ‘there will be consequences’ if the Chinese telecoms giant is excluded and floats possibility of German cars being banned on safety grounds
    German politicians are seeking to pass a bill to exclude ‘untrustworthy’ firms from 5G network amid ongoing security fears surrounding company


  3. Neil Says:

    If they weren’t hitting the wall, the PLA would have been committing wholesale slaughter in Hong Kong by now, and Trump would be getting effective pushback on his tariffs. They’re cornered, and they’re hoping that something changes politically in the U.S. or Europe before the Chinese people run out of patience.

  4. feeblemind Says:

    China Liquidity Jitters Are About to Test Bond Market Again

    From the article:

    The country will see a “liquidity hole” of 2.8 trillion yuan ($400 billion) in January, in large part because people across the nation will withdraw cash for the Lunar New Year holiday, according to Guotai Junan Securities Co. That means bond traders expect the central bank to unlock funds to avoid the liquidity-driven panic seen in October, when the benchmark 10-year yield spiked the most in six months.


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