Beware Of China’s Stealth Liquidity Tightening

15 Nov 2023

by Arthur Budaghyan, Chief EM/China Strategist

Many commentators have attributed the latest increase in Chinese interest rates to an improving economy, the large issuance of government bonds, the tax payments season, and other technical factors. Yet, these explanations are missing the key point: the PBoC has steered interbank rates higher to defend the currency. Higher borrowing costs are the last thing the mainland economy now needs.

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