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Shuli Ren

China Is Killing Its Bond Bull to Save Main Street

The PBOC knows the pitfalls of loose monetary policy all too well. 

It’s mine.

It’s mine.

Photographer: Qilai Shen/Bloomberg

You’ve got to feel for central bankers. Their hearts are in the right place, with all these efforts to help Main Street businesses weather a bad economy. But their largesse often ends up on Wall Street, in the pockets of traders and big corporate treasurers. 

The People’s Bank of China sure knows how that goes. Since the beginning of June, the central bank has refrained from easy cash injections, which send liquidity to all the wrong places. Instead, they’ve chosen an even more targeted approach, beefing up programs that offer complex special-lending vehicles to small businesses. Last week, via open-market operations, the PBOC net drained 450 billion yuan ($63.7 billion) from the banking system, the most since mid-February.