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Economists predict that China will add significant stimulus to its economy early in 2022.

That’s just speculation at this point but it makes very solid sense given:

1. The likely slowdown in China’s economic growth in the fourth quarter of 2021.

2. A likely official growth target for 2022 of 5% or more

3. The Chinese Communist Party’s sense that ideology is no longer enough to keep China’s people fully behind Party rule and that growth of better than 5% is is a key part of the Party’s contract with the average Chinese citizen.

China’s economy has slowed in recent months as a result of weak consumption growth, the continued debt crisis in the real estate development sector, and repeated outbreaks of Covid-19 that has resulted in economic shutdowns in a large number of Chinese cities.

Economists forecast that GPD growth will slow to 3.1% in the fourth quarter. That would be a huge drop from the 4.9% growth in the July through September quarter and from the 7.9% growth in the April to June period.

At the end of the annual three-day Central Economic Work Conference on Friday, the Party leadership said the top priority for next year is “ensuring stability.” They also vowed to “front load” policies and keep the monetary stance flexible and appropriate.

That’s the kind of vague language we expect from the U.S. Federal Reserve but in the current Chinese economic context it strongly points to efforts to raise consumer consumption, to bail out wobbly companies, and to push the economy into a higher gear by adding trillions of yuan in stimulus to the economy. It also seems to suggest that this year’s efforts to curb speculative risk and reduce debt in the economy will take a back seat to measures focused on raising the growth rate.

The official target for economic growth in 2022 won’t be revealed until March but the early betting is that the People’s Bank, which moved last week to add cash to the economy by reducing bank reserve requirements, will act even before then with the size and speed of the bank’s efforts increasing toward the March announcement.

This sets up an “interesting” problem for investors. Additional stimulus would normally push all prices higher in China’s stock markets but given what is likely to be a continued crackdown by regulators on China’s big Internet companies and the Chinese-and-U.S. restrictions on listing of Chinese companies on U.S. stock markets, picking winners from the general stimulus gets a bit more complicated.

Right now, price movements in stocks with Chinese “exposure” suggest that investing in companies that do business with China might be more profitable and less risky than investing in the usual big China names.

The trend is likely to be up on any increase in stimulus but picking what horses to back looks complicated for 2022.