prc30 on Nostr: China Evening Missive So there was, in the end, a Politburo meeting held in advance ...
China Evening Missive
So there was, in the end, a Politburo meeting held in advance of the Central Economic Work Conference. Now we have everyone feverishly trying to dissect exactly what the wording of the official statement means. Here’s my take; increased optionality.
What do I mean by this? Well, it should be no surprise that the Politburo centered on the applicability of both monetary and fiscal tools to support the economy. Commentary will latch on to words like “proactive” and “loose” as some sort of indication of what is intended. Honestly, it could mean just about anything. It’ll all depend on how overall economic activity trends in the coming months.
The overall aim is to widen HOW monetary and fiscal tools could be applied with the operative word here being “could”. In true Chinese fashion the details are left to the imagination. I should add that the statement did, and for the first time I believe, specifically addresses stabilizing the property and stock markets. This would align with the growing consensus outlook of an indirect household stimulus via the “Wealth Effect”. Maybe, but there remains an over abundance of caution.
This all looks great on paper as we say. From what I can gather, the policy priority remains unchanged. System-wide deleveraging. Expectations for nearly two years centered on some sort of large fiscal stimulus response. It’s not yet happened, and I remain doubtful that it will in 2025. Having said that, the Politburo – this time around – did give itself greater optionality.
So there was, in the end, a Politburo meeting held in advance of the Central Economic Work Conference. Now we have everyone feverishly trying to dissect exactly what the wording of the official statement means. Here’s my take; increased optionality.
What do I mean by this? Well, it should be no surprise that the Politburo centered on the applicability of both monetary and fiscal tools to support the economy. Commentary will latch on to words like “proactive” and “loose” as some sort of indication of what is intended. Honestly, it could mean just about anything. It’ll all depend on how overall economic activity trends in the coming months.
The overall aim is to widen HOW monetary and fiscal tools could be applied with the operative word here being “could”. In true Chinese fashion the details are left to the imagination. I should add that the statement did, and for the first time I believe, specifically addresses stabilizing the property and stock markets. This would align with the growing consensus outlook of an indirect household stimulus via the “Wealth Effect”. Maybe, but there remains an over abundance of caution.
This all looks great on paper as we say. From what I can gather, the policy priority remains unchanged. System-wide deleveraging. Expectations for nearly two years centered on some sort of large fiscal stimulus response. It’s not yet happened, and I remain doubtful that it will in 2025. Having said that, the Politburo – this time around – did give itself greater optionality.