China’s Rolling Boom-Bust Cycle

Sweet Authoritative Nothings
There is a mysterious figure making regular appearances in China’s government mouthpiece ‘People’s Daily’, which simply goes by the name ‘authoritative person’ (AP). This unnamed entity always tends to show up with bad news for assorted speculators, by suggesting that various scenarios associated with monetary and/ or fiscal stimulus are actually not in China’s immediate future (the details of AP’s latest pronouncements can be found here and here).
Some observers seem to believe that this represents a ‘renewed shift in policy’ – Bloomberg e.g. quotes an economist with Mizuho Securities as follows:
‘It is very significant and may signal a shift in China’s policies,’ said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. ‘Each time they publish this, it is normally a warning.’
Others are more careful – after all, this seems to be a case of ‘we’re saying one thing and doing another’, given a credit expansion of 4.6 trillion yuan in just the first quarter, which has sent narrow money supply growth soaring to more than 22% annualized.
The more measured argument is that it could be a sign that the debate about future economic policy is ongoing, resp. has been revived. No-one really knows – it is basically the Chinese version of Kremlinology.

This post was published at Acting-Man on May 17, 2016.