China Stimulus: Fourth Time a Charm?
https://trendmacro.com/system/files/reports/20240930trendmacromccarthy-vb.pdf
Monday, September 30, 2024
An impressive rally, but this is nothing that hasn’t been tried (and failed) many times now.
Asia Macro
Asia Stocks
The Peoples Bank of China and the Politburo have announced monetary and fiscal stimulus, and equity markets have responded with a large rally. But the measures announced are almost literally the same things that have already been tried over the last four years of a relentless bear market. Why should they work this time? Throwing more debt at an already debt-heavy economy won’t help, and its usual transmission channel – housing speculation – is moribund. Demand-side measures will fail, when the issue is China’s supply-side inefficiency, worsened by a an increasingly repressive regime of central planning. The authorities cannot buy their way to a prosperous totalitarianism by pushing the string of credit.