Chinese monetary easing is here, but don’t call it QE
We now know that the high profile debt-for-bond swap program of the Chinese government has officially failed. Beijing’s plan was to help local authorities refinance RMB 1tn (US$163bn) on debt due to mature this year. But underwriters were unable to attract enough investors who were interested in exchanging debt. The proposed business for investors was short-term, high-interest bank loans of sub-national governments for low-interest, long-term municipal bonds. Pauline Loong, managing director of Asia-analytica Research, explains that one of the possible reasons of this flop is “the unmentionable issue of creditworthiness (or the lack of it)”. But Loong says the episode has not stopped authorities from looking for ways to stimulate the economy. On the contrary, it has just embarked the People’s Bank of China into an easing program, but with its own characteristics. So don’t call it QE. To read more click here: (VIEW LINK)
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