With China's Economy On "Verge Of Collapse", PBOC Central Banker Calls For Helicopter Money
https://www.zerohedge.com/markets/chinas-economy-verge-collapse-pboc-central-banker-calls-helicopter-money
As Bloomberg's Garfield Reynolds writes in the aftermath of last night's unexpected Chinese rate cut, while the nation's economic struggles were (finally) severe enough for the authorities to respond with their biggest interest-rate cut since the pandemic, it will be nowhere near powerful enough to help spark a turnaround.
-Country Garden just defaulted;
-Zhongzhi Enterprise Group missed payments on high-yield investment products;
-recent bank loan data were terrible;
-and today saw industrial production 3.7% y-o-y (4.3% expected),
-retail sales 2.5% y-o-y (vs. 4.0%),
-fixed asset investment 3.4% y-o-y year-to-date (vs. 3.7%),
-property sales -8.5% y-o-y year-to-date (vs. -8.1%),
-and unemployment 5.3% vs. 5.2% (not to mention that youth unemployment which just hit all time highs, will no longer be reported for obvious reasons).
Summing it up, China “has fallen into a psycho-political funk,” says the FT, as its youth tell Soviet jokes again or say ‘let it rot’, and a high-earning Beijing worker is quoted as saving as much as he can to prepare for a property crash or a move against Taiwan.
So is there anything that could actually stop the bleeding in China from an economic or market perspective? Well, as Nomura's Charlie McElligott writes - and agrees with our assessment - the biggest reason why China is imploding in slow-motion is that that, as opposed to rest of world, Chinese authorities never responded with Fiscal transfer into pockets of individuals and businesses who were bled dry during the covid crisis.
Hence, the one thing that could truly “shock and awe” markets would be outright “helicopter drops” of money direct to households and businesses in order to stimulate DOA Chinese consumption.
Impossible you say, after all China has nearly 300% debt/gdp… only the terminal economic basket case that is Japan is higher.