Pacific Investment Management Company (PIMCO) is a US firm that manages circa US$1.9 trillion in assets.
The firm have a publicly available piece posted in which they argue:
- The People’s Bank of China have announced it has begun to reduce coronavirus-related stimulus early
- policy tightening in China is already being felt domestically in the form of tighter money market liquidity, moderating private credit growth, and reduced government bond issuance
- PBOC is targeting overall credit to grow in line with nominal GDP, implying the credit impulse will fall to around -3.5% of GDP by year-end, from a peak above 9% in the fourth quarter of 2020. All else equal, this may slow China’s economic activity to below-trend levels by late 2022.
One of the key implications PIMCO cites is:
- China provides a key engine of global growth … If past is prologue, developed countries may be required to maintain stimulus measures for longer than presently expected.
Here is the link if you want to read quite a bit more.