Why China Does Not Dare to Solve Its Problems by Printing Large Amounts of Money

Why China Does Not Dare to Solve Its Problems by Printing Large Amounts of Money
For most countries facing such a huge crisis, the central bank printing money and injecting liquidity is almost the designated act. Interestingly, however, the People’s Bank of China did not do anything like this, and there was not even a rate cut cycle. CFOTO/Future Publishing via Getty Images
Law Ka-chung
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Commentary

China’s proposal of a 300 billion Yuan bank loan to rescue the housing sector is obviously a tiny amount compared to the amount outstanding; I discussed this in last week’s piece here. At first glance, it looks odd that the proposal orders banks to play the role of lender of last resort instead of the central bank. For most countries facing such a huge crisis, the central bank printing money and injecting liquidity is almost the designated act. Interestingly, however, the People’s Bank of China did not do anything like this, and there was not even a rate cut cycle.

Law Ka-chung
Law Ka-chung
Author
Law Ka-chung is a commentator on global macroeconomics and markets. He has been writing numerous newspaper and magazine columns and talking about markets on various TV, radio, and online channels in Hong Kong since 2005. He covers all types of economics and finance topics in the United States, Europe, and Asia, ranging from macroeconomic theories to market outlook for equities, currencies, rates, yields, and commodities. He has been the chief economist and strategist at a Hong Kong branch of the fifth-largest Chinese bank for more than 12 years. He has a Ph.D. in Economics, MSc in Mathematics, and MSc in Astrophysics.
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