China Frees Up $140 Billion With Rate Cut In Bid To Halt Stock Rout
China's taken to pre-announcements lately.
Last week, Premier Li Qiang revealed the headline annual growth figure for 2023 in Davos a day before the official GDP release. On Wednesday, Pan Gongsheng told a briefing that the PBoC will cut the reserve requirement for banks next month.
I don't know what's behind the sudden inclination to tip off markets on key data and policy decisions, but it's not typical.
The RRR cut would be (or will be, I guess) the first since September, and this time it's
Call this one of my typical flights of fancy but something occurred to me whist reading this. Xi is worried. The last estimate I saw of the size of China’s rising middle class is that it is probably larger than 400 million souls. The people want things and within reason, Xi wants them to buy things. And if they could fund their golden years (a valuable part of Chinese culture) with investments, it would be better for the country. So as my as Xi is trying to ruin what he considers to be greedy capitalists, he needs them to buy stuff, help fund GDP growth, and survive in their senior years. That 400 million consumers and business founders is a population bigger than the whole US. It is valuable and Xi cannot afford to create too much damage to these folks. He kind of has to remain a closet capitalist. He is getting older, and like all of us, he knows that. He wants to be remembered in the same breath with Mao but he can’t leave the country in a shambles like his idol did. He has to place his society/economy on a razor’s edge and offer nightly prayers to whomever. I suggest another read through of the “Analects.” Balance, Xi, always balance.
Pushing on a noodle.
The bottom-fisher in me is tempted. But I exited BABA TCEHY etc almost four years ago, and the work required to relearn the stocks might be better spent on, say, semis or transports or any number of US industries.