LOS ANGELES, Dec. 14, 2021 /PRNewswire/ -- In a new
research paper, DoubleLine Global Bond Strategy Portfolio Manager
Bill Campbell expects China's
government and monetary authorities, which had slowed economic
stimulus earlier this year, to boost stimulus in 2022, with
supportive impacts on the global as well as Chinese economy.
To read the paper, titled "Beijing to Embark on New Round of Stimulus in
2022," please visit this landing page:
https://doubleline.com/wp-content/uploads/Campbell-on-Beijing-Stimulus_December-2021.pdf
"However, internal politics rather than international
considerations will dictate the timing of China's resumption of
stimulus," Mr. Campbell writes. "Beijing will attempt to sequence and calibrate
fiscal and monetary policy to the economic upside to culminate
shortly before or by the opening of the 20th National Congress of
the Chinese Communist Party next October. At this event,
China President Xi Jinping is
expected to be appointed to an unprecedented third term – in modern
China, leaders have not served longer than two five-year
terms."
In fact, Mr. Campbell argues that "Beijing has already started to thaw its icy
policy stance. The People's Bank of China reduced the required
reserve ratio for banks by 0.5%, effective on December 15, 2021. The reduction of this ratio
had the impact of increasing liquidity by an estimated 1.2 trillion
Chinese yuan (equivalent to $188
billion in U.S. dollar terms). To be sure, Chinese
authorities will try to prevent excessive speculation, and the
trajectory of regulation will remain on a tighter path than we have
seen in previous years. That said, loosening China's overly tight
stance today and an increase in the credit impulse will benefit the
Chinese economy and by extension the global economy in
mid-2022."
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SOURCE DoubleLine