China Says More Aid Coming as Downdraft From Trade War Rises
Comment of the Day

October 31 2018

Commentary by Eoin Treacy

China Says More Aid Coming as Downdraft From Trade War Rises

This article from Bloomberg News may be of interest to subscribers. Here is a section:

The signal of increasing urgency came just hours after purchasing manager reports showed an across-the-board deterioration that risks spilling into a broader drag on global growth. The world’s second largest economy is being damaged by its trade war with the U.S. and a domestic debt cleanup.

With those pressing constraints, officials have added modest policy support so far, ranging from tax cuts to regulatory relief, rather than repeating the fiscal firepower seen after a previous slowdown. Investors seem unpersuaded by the drip-feed approach with the yuan hovering around a decade low and stocks sliding.

“Accepting slower growth has long been a challenge for Beijing, but now the rate of slowdown is firmly out of the comfort zone,” said Katrina Ell, an economist at Moody’s Analytics in Sydney. “In recent years the balancing act has been addressing risks in the financial system against pressure to stabilize economic growth. It appears the latter is again more of a priority.”

Eoin Treacy's view

Major rallies in Chinese mainland stocks tend to be state sponsored. It’s the Communist Party’s equivalent of a central bank put and it’s something investors have tended to wait for before committing to a rally.

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