China Signals Liquidity Is to Fuel Growth, Not Speculation
- Friday’s cash drain seen by some as move against speculators
- Officials monitoring effectiveness of their monetary stimulus
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China offered a surprise reminder to bankers swimming in a pool of cash for months now that its liquidity boost is aimed at rejuvenating the economy, not helping support financial speculation.
Draining cash from the banking system Friday, policymakers said their support has already “fully” satisfied financial institutions’ needs, language it hadn’t used in at least a year. While there are no signs that banks are desperate for cash, the move also underscored Beijing’s frustration that its monetary stimulus has had more of an impact in fueling a bond market rally than in lifting economic growth.