PBOC ‘poised to pull QE trigger’ as economy stalls

29-Apr (ChinaDaily) — Financial markets on the Chinese mainland are abuzz with speculation that the central bank will inject more liquidity into the economy by unconventional means that could amount to a version of “quantitative easing”.

The People’s Bank of China may adopt new policies that could include direct purchases of local government bonds from the market, a report by Market News International said on Monday. The Wall Street Journal also reported that the government may let banks use these notes as collateral for loans from the central bank.

Economic growth in China has been slowing, but unlike Europe and the United States, there is abundant scope in China to counter the downward pressure by conventional means as reducing interest rates and cutting banks’ reserve requirement ratios, both of which have been done in recent months.

So it seems strange, to say the least, to be talking about QE. However, a closer look suggests that the idea is not so irrational, and an aggressive asset-purchasing program with Chinese characteristics can be expected.

[source]