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Tag Archives: PBoC

China’s Dollar Problem Puts the Sync In Globally Synchronized Downturn

Because the prevailing theory behind the global slowdown is “trade wars”, most if not all attention is focused on China. While the correct target, everyone is coming it at from the wrong direction. The world awaits a crash in Chinese exports engineered by US tariffs. It’s not happening, at least according to China’s official statistics. The reported numbers aren’t good by any stretch, but they aren’t perhaps as bad as imagined by the constant references to what we are told is the number one...

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China Nastier Number Four

Officials in China seem to be taking a page out of Mario Draghi’s playbook. Before Europe was pushed to the bring of recession, the President of Europe’s central bank would downplay any weakness in the European economy. In 2018 especially, Draghi frequently referred to 2017 as if it was something special. No cause for concern, he reassured, any softening was just the Continent slowing down from really awesome growth. With the ECB restarting QE last month, he hasn’t used that reference in some...

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Dollar (In) Demand

The last time was bad, no getting around it. From the end of 2014 until the first months of 2016, the Chinese economy was in a perilous state. Dramatic weakness had emerged which had seemed impossible to reconcile with conventions about the country. Committed to growth over everything, and I mean everything, China was the one country the world thought it could count on for being immune to the widespread economic sickness. That’s why in early 2016 authorities panicked into another huge, and...

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Is The Negativity Overdone?

Give stimulus a chance, that’s the theme being set up for this week. After relentless buying across global bond markets distorting curves, upsetting politicians and the public alike, central bankers have responded en masse. There were more rate cuts around the world in August than there had been at any point since 2009. And there’s more to come. As Bloomberg reported late last week: Over the next 12 months, interest-rate swap markets have priced in around 58 more rate cuts, assuming central...

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China’s Next Warning

Chinese monetary authorities announced today what will be for some of its banks a seventh round of “stimulus.” For the largest institutions, it will “only” be their sixth and the first one since January 2019. The PBOC has decided it is time for more RRR cuts. Effective September 16, the ratio all banks are required to hold of reserves will be reduced by 50 bps; applying to certain city banks, the decrease will be 100 bps. It sounds like a flood of stimulus, enabling China’s...

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China Throws More ‘Stimulus’ At The Wall

Earlier this year, Chinese authorities reduced the VAT tax the government charges auto manufacturers. Intended to boost consumption, the levy was reduced from 16% to 13% in the hope automakers would pass along the savings to consumers. Many if not most manufacturers did. The results were immediate, and fleeting. In the month of March 2019, total car sales fell “only” 5.2% after six straight months of double-digit declines. Many were encouraged by the single result. According to the China...

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The Fingerprints of Bumbling (China)

For a cabal of superpatient supergeniuses, the Chinese tend to play with fire quite often. According to many, the Communists have perfected the art of technocracy and are merely waiting out the impetuously free West. The dollar system will destroy itself (there’s the kernel of truth) allowing a perfectly positioned China to swoop in and rescue the global economy with its scientifically specified yuan. Some even have gone so far as to claim the new world order of CNY will surely be...

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China’s Superplan; Or, The Familiar (Dollar) Disorder of Bumbling Failure

Always aspiring to technocratic greatness, China’s Communist Party is set up to run like clockwork. It’s supposed to go off in predestined fashion, a course programmed into the vast apparatus by highly proficient experts. It is, or is supposed to be, comforting that order and control over the complex main spheres of daily life can be managed down the detail and on a preset schedule. Every five years, the Communist Party holds its Congress. The main meeting is devoted to the big stuff. The...

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That Can’t Be Good: China Unveils Another ‘Market Reform’

The Chinese have been reforming their monetary and credit system for decades. Liberalization has been an overriding goal, seen as necessary to accompany the processes which would keep the country’s economic “miracle” on track. Or get it back on track, as the case may be. Authorities had traditionally controlled interest rates through various limits and levers. It wasn’t until October 2004, for example, that the upper limit on lending rates was rescinded. In August 2006, the mortgage rate...

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Why Go After Hong Kong?

There may yet be bitter irony in the fact that China’s nascent embrace of capitalism in the late eighties allowed it to survive the wave of failed socialist states which fell all throughout the world at the time. While the Berlin Wall came down, the Eastern bloc nearly disappeared, and even the Soviet Union dissolved, the Chinese would stand almost alone as whatever was left of the Communist dream. But while Beijing had come through in the nineties and transformed China into a modern...

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