China Revamps Credit Expansion as PBOC Balance Sheet Shrinks
By-
PBOC assets have dropped as foreign-exchange reserves fell
-
China’s credit and money supply have expanded nonetheless
Sometimes it helps to have a command economy.
While central bankers in Japan, Europe and the U.S. have struggled in recent years to stoke credit growth even as they grew their balance sheets to unprecedented size, the People’s Bank of China is succeeding, with a very different approach.
For all the Communist Party’s rhetoric about giving a decisive role to markets, China’s financial system remains dominated by state-owned lenders. That’s come in handy as policy makers loosened monetary policy since 2014 to shore up a slowing economy. Officials can direct banks to make new loans or roll over existing ones. The PBOC has also been expanding support for “policy banks” that support government objectives…
China Revamps Credit Expansion as PBOC Balance Sheet Shrinks
