Bloomberg’s Ye Xie references ASR’s Adam Wolfe on China Stimulus
7th JUL. 2022
In “Xi’s $220 Billion Stimulus Is Less Than Meets Eye”, Adam notes that pulling forward next year’s budget means China faces a fiscal cliff in 2023. “This is more can-kicking than real stimulus”
Last week’s Bloomberg report that the MoF might allow local governments to issue CNY1.5tn from their 2023 bond quotas could be a game changer, especially since it follows on the heels of other newly approved measures to help finance infrastructure projects, including a CNY800bn credit line from the policy banks.
Does that mean this is the start of a more significant credit cycle? Adam remains sceptical. In his ASR Insight he notes that “pulling forward government bond issuance would just delay a looming fiscal cliff and wouldn’t significantly change the credit impulse” (see chart) and “the other measures are aimed at balance sheet repair, not broader credit growth”.
•To view the full Bloomberg story click HERE (subscription may be required)
•ASR clients can view Adam’s Absolute Insight: What to make of stimulus chatter in China HERE.
•To request a copy of Adam’s note as part of a free trial, please click HERE.