Is China Really Tightening?

Chinese Monetary Policy – No Thunder ‘Crost The Bay!

 

Warnings persist about China’s monetary tightening threat. China is unquestionably important, but a close examination of monetary data finds no compelling evidence that they are tightening policy. The most that can be said is that open-market operations have recently stalled, but liquidity levels seem adequate. We think that too much has been read into the weak stock market and too much extrapolated from seasonally distorted official monthly liquidity data. In reality, China looks remarkably stable.