More on China’s priority for the recovery and expansion of domestic consumption

I’ve been posting on stimulus efforts coming out of China, most recently these:

PBOC wants to boost domestic demand, expand consumption

And, yesterday these:

1. policy support for the economy:

2. A potential bounce out of COVID:

3. Seasonal demand:

4. More property market support (some sources are reporting this as “China is reportedly mulling measures to shore up “too big to fail” developers”):

Stuck away at the bottom of Caixin services PMI report from today is this:

• “Under pressure from shrinking demand, weakening expectations and a supply shock, the annual Central Economic Work Conference stated that the foundation for an economic recovery is not solid. Policymakers have made it clear that priority must be given to the recovery and expansion of domestic consumption. This requires not only elevated social expectations and confidence in development, but various policies to work in tandem in stabilizing the job market and effectively increasing the disposable income of residents.”

I suspect there will be more policy announcements to come from China as it recovers from the recent COVID-19
Covid-19

Covid-19 or the novel Coronavirus is a pandemic that has yielded wide ranging economic turmoil and volatility across financial markets in 2020.  The first cases of Covid-19 were reported in Wuhan, China in late 2019. Since then, the virus has expanded globally, infecting millions worldwide.  The virus has been extremely controversial, namely in the United States, which became heavily politicized during the 2020 presidential election. The Covid-19 pandemic is completely unprecedented in modern times, with the most recent example being the influenza outbreak in 1918.  Financial markets and global economies were completely unprepared for the scope of the virus, causing massive shutdowns, unemployment, and other hardships in an effort to contain and mitigate the virus. How Has Covid-19 Affected Markets? Virtually every asset has in some way been affected by Covid-19. Early on, financial markets and equities collapsed, with the nadir coming in March 2020 in the United States and Europe. Widespread lockdowns led to an economic standstill, resulting in stimulus packages to help keep domestic economies functioning.  The result of this has been a depreciation of currencies such as the US dollar, with the Federal Reserve printing billions of dollars to pare economic losses. Forex markets have since experienced historic levels of volatility, leading some to classify the Covid-19 pandemic as a Black Swan event. Financial markets have for the most part rebounded in 2020 at the time of writing, though many headwinds remain in terms of economic recovery. Presently, unemployment rates and other indicators remain problematic, and when coupled with rising rates of infection, portend additional monetary policy action or stimulus in both Europe and the US. At the time of writing there is no vaccine for Covid-19 though several companies such as Pfizer and Moderna are close to producing a viable vaccine.

Covid-19 or the novel Coronavirus is a pandemic that has yielded wide ranging economic turmoil and volatility across financial markets in 2020.  The first cases of Covid-19 were reported in Wuhan, China in late 2019. Since then, the virus has expanded globally, infecting millions worldwide.  The virus has been extremely controversial, namely in the United States, which became heavily politicized during the 2020 presidential election. The Covid-19 pandemic is completely unprecedented in modern times, with the most recent example being the influenza outbreak in 1918.  Financial markets and global economies were completely unprepared for the scope of the virus, causing massive shutdowns, unemployment, and other hardships in an effort to contain and mitigate the virus. How Has Covid-19 Affected Markets? Virtually every asset has in some way been affected by Covid-19. Early on, financial markets and equities collapsed, with the nadir coming in March 2020 in the United States and Europe. Widespread lockdowns led to an economic standstill, resulting in stimulus packages to help keep domestic economies functioning.  The result of this has been a depreciation of currencies such as the US dollar, with the Federal Reserve printing billions of dollars to pare economic losses. Forex markets have since experienced historic levels of volatility, leading some to classify the Covid-19 pandemic as a Black Swan event. Financial markets have for the most part rebounded in 2020 at the time of writing, though many headwinds remain in terms of economic recovery. Presently, unemployment rates and other indicators remain problematic, and when coupled with rising rates of infection, portend additional monetary policy action or stimulus in both Europe and the US. At the time of writing there is no vaccine for Covid-19 though several companies such as Pfizer and Moderna are close to producing a viable vaccine.
Read this Term surge.

And, as I said earlier:

• The regular monthly prime rate setting is coming up on the 20th of January. Ahead of that will be extra injections of liquidity via open market operations (OMO), and perhaps even a medium-term lending facility (MLF) into Chinese New Year holidays (commencing January 21).

ADVERTISEMENT – CONTINUE READING BELOW