As Beijing pivots energetically from Covid lockdowns to economic recovery, no one is in a hotter seat than Yi Gang, governor of the People's Bank of China.
Since the 1990s, the Group of Seven nations has adopted a“central-banks-take-the-lead model.” For better or worse, political polarization and gridlock had government officials passing economic maintenance duties to monetary officials. Now China is, too.
In Beijing's case, Yi's team is the obvious choice to lead the charge back toward 5% growth in 2023. President Xi Jinping's moves this week to scale back pandemic curbs sets the stage for a the likes of which Asia has never seen before.
This onus is on the PBOC to prime the pump, and Yi is already on the case. The PBOC's November 25 move to support struggling companies with a cut in reserve requirement ratios was a preview of a stimulus policy about-face.
Days earlier, on November 21, Yi's staff met with big commercial banks, green-lighting them to do something the PBOC previously discouraged: lending dollars from their overseas branches to the offshore subsidiaries of mainland China property developers. That calmed nerves in a sector that can generate as much as 30% of gross domestic product.
But risks abound as Yi refills the proverbial monetary punchbowl. The PBOC needs to get the balance right between stabilizing growth and not encouraging bad behavior among corporate borrowers.
Asia Times' Global Polarity Monitor newsletter this week detailed the ways in which reviving the economy will take precedence over the government's desire for long-term structural reform. For example, authorities are instructing large state banks to make an additional 1.28 trillion yuan (US$185 billion) available to developers.
Early on, regulators set a high bar for collateral quality. Standards have since been relaxed.
Herein lies the rub. Japan is a cautionary tale of the high cost the China might pay 10 years from now for an all-stimulus-no-reform response to today's“zero Covid” economic trauma....
....MUCH MORE
The former number 2 at China's CDC, Feng Zijian, says 90% of the population will contract covid which rather puts the lie to all the reasons and excuses the party/government were using to weld shut the doors on apartment blocks. And the covid concentration camps. And all the rest.
So for now I think we'll stick with our theory that there is something else going on:
What If Our Understanding Of China's "Zero Covid" Is 180 Degrees Wrong?
Related: "China Quietly Launches QE: Beijing Orders Large Insurers To Buy Bonds To Contain Selling Panic"
