China releases GDP on Friday, the WSJ speculates what it will do next if growth is weak.
The first step would likely be a cut in the reserve-requirement ratio for banks—freeing up additional funds for lending. Falling inflation and low public debt mean the government also has room for further cuts in interest rates and increases in infrastructure spending.
Another investment splurge won’t do China’s long-term growth prospects any good. But amid a once-in-a-decade transition for the country’s political leadership, policy makers will focus on the here and now.
The leadership transition story has been repeated so many times that it’s accepted as fact. I’m not so sure it’s true in a country that’s famous for long-term decision making but it would certainly adds to the AUD/CAD bullish hypothesis.