- Mini-stimulus via monetary and fiscal policies cannot provide long term power for economic growth and their risks cannot be underestimated
- Says PBOC’s targeted policy measures cannot guarantee money is flowing to where it’s most needed
- (noted that in Europe, estimates that only 5% of the ECB’s LTRO during 2011 and 2012 was used to fund the real economy)
- Warned that M2 at the end of June rose much higher than the government’s target, and that government and corporate leverage ratios are on the rise, which is against the policy intention of deleverage
- Said the debt ratios of some companies are too high, non-performing loans at industries with excess capacity are rising, some private companies are on the verge of defaulting on their bonds
- Called on the government to step up reform measures to fuel growth, including more tax cuts and less government intervention in the economy
Last week the Journal called for broad based cuts to the Reserve Ration Requirement (RRR) which led more than a few commentators to declare that the credit tap was wide open once more in China. The lesson is probably to ignore, or at least, take with a grain of salt, CSJ commentaries.
Whatever it is, iron ore doesn’t like it. Steel futures are down another 1% at the open and iron ore futures are down 1.5%.
