Wall Street is busy begging China to stimulate. It knows no other way. Yesterday Goldman Sachs was on its knees:
Looking beyond the immediate risks and uncertainties around Evergrande, we believe two other policy adjustments are also needed. First is the overall macro policy stance. Despite the recent increases in on-budget and off-budget fiscal spending and moreMLF/OMO liquidity operations than market expected in September, the overall domestic policy stance still appears too tight to us. Additional easing on both fiscal and monetary fronts is needed in Q4 to ensure sufficient growth momentum as we head into 2022. Second is the pace of structural changes. When it comes to long-term goals such as de-carbonization and property market deleveraging, the pace of policy implementation is as important as the ultimate policy objectives. In the case of deleveraging, both the2018 experience and the recent turn of events in the property market illustrate that, if the push to lower debt is compressed into too short a timeframe, growth may slow significantly and we may end up with a higher, not a lower, macro leverage.
Or, put another way, lower not higher stock and commodity prices.
