Think of it as a first step toward a policy move and not as an actual plan for action.
In its quarterly monetary policy report released Sunday, the People’s Bank of China said it will resort to “more powerful” policies to counter unprecedented economic challenges from the coronavirus pandemic. The central bank will “work to offset the virus impact with more powerful policies,” paying more attention to economic growth and jobs while it balances multiple policy targets. One key absence in the report: The bank dropped its earlier promise to “avoid excess liquidity flooding the economy” from the fourth quarter of 2019.
Beijing is set to release macro economic data for April later this week. The People’s Bank has already seen those numbers, of course. They’re likely to provide the data to support a loosening of monetary policy.
All this is a run up to the May 21-22 meetings of first the Chinese People’s Political Consultative Conference and then the National People’s Congress. The coronavirus outbreak in China pushed those meetings from their usual March slot and led to the sessions being cut in half to one week.
But those meetings will announce the year’s goals for economic growth, although this year many China analysts expect the targets to be more vague than usual.
Which makes the news from the People’s Bank feel like preparation for a commitment from China’s leaders to increase growth.
That was my logic, at least in adding the iShares Large Cap ETF (FXI) to my Perfect 5 ETF Portfolio and Meituan Dianping (MPNGF) to my Volatility Portfolio on my subscription JugglingwithKnives.com ($79 a year) and JubakAM.com ($199s year) sites. The positions are up 1.21% and 11.46%, respectively, since I made those additions on April 20.