DoubleLine.com Posts Paper Forecasting Resumption by China of Economic Stimulus in New Year

Rhea-AI Summary

DoubleLine's research paper indicates that China is expected to resume economic stimulus in 2022, which could positively impact both the global and Chinese economies. Portfolio Manager Bill Campbell notes that internal political factors will influence the timing of this stimulus, particularly before the 20th National Congress of the Chinese Communist Party in October 2022. Recently, the People's Bank of China reduced the required reserve ratio for banks, enhancing liquidity by approximately $188 billion. This shift suggests a move towards more supportive fiscal policies for economic growth.

Positive

• China's expected resumption of economic stimulus in 2022 may boost both domestic and global economies.
• Recent reduction of the required reserve ratio by the People's Bank of China is expected to increase liquidity by approximately $188 billion.

Negative

• None.

LOS ANGELES, Dec. 14, 2021 /PRNewswire/ -- In a new research paper, DoubleLine Global Bond Strategy Portfolio Manager Bill Campbell expects China's government and monetary authorities, which had slowed economic stimulus earlier this year, to boost stimulus in 2022, with supportive impacts on the global as well as Chinese economy.

To read the paper, titled "Beijing to Embark on New Round of Stimulus in 2022," please visit this landing page: https://doubleline.com/wp-content/uploads/Campbell-on-Beijing-Stimulus_December-2021.pdf

"However, internal politics rather than international considerations will dictate the timing of China's resumption of stimulus," Mr. Campbell writes. "Beijing will attempt to sequence and calibrate fiscal and monetary policy to the economic upside to culminate shortly before or by the opening of the 20th National Congress of the Chinese Communist Party next October. At this event, China President Xi Jinping is expected to be appointed to an unprecedented third term – in modern China, leaders have not served longer than two five-year terms."

In fact, Mr. Campbell argues that "Beijing has already started to thaw its icy policy stance. The People's Bank of China reduced the required reserve ratio for banks by 0.5%, effective on December 15, 2021. The reduction of this ratio had the impact of increasing liquidity by an estimated 1.2 trillion Chinese yuan (equivalent to $188 billion in U.S. dollar terms). To be sure, Chinese authorities will try to prevent excessive speculation, and the trajectory of regulation will remain on a tighter path than we have seen in previous years. That said, loosening China's overly tight stance today and an increase in the credit impulse will benefit the Chinese economy and by extension the global economy in mid-2022."

About DoubleLine

DoubleLine provides its services through investment advisers registered under the Investment Advisers Act of 1940. As of the September 30 close of the third quarter of 2021, DoubleLine managed $137 billion in assets across all vehicles, including open-end mutual funds, collective investment trusts, closed-end funds, exchange-traded funds, hedge funds, variable annuities, UCITS and separate accounts. DoubleLine's offices can be reached by telephone at (213) 633-8200 or by e-mail at info@doubleline.com. News media can reach DoubleLine by e-mail at media@doubleline.com. DoubleLine® is a registered trademark of DoubleLine Capital LP.

View original content to download multimedia:https://www.prnewswire.com/news-releases/doublelinecom-posts-paper-forecasting-resumption-by-china-of-economic-stimulus-in-new-year-301444604.html

SOURCE DoubleLine

FAQ

What is DoubleLine's forecast for China's economic stimulus in 2022?

DoubleLine forecasts that China will resume economic stimulus in 2022, influenced by internal political factors.

How much liquidity is expected to increase due to China’s reserve ratio reduction?

The reduction of the required reserve ratio is expected to increase liquidity by about $188 billion.

When is the 20th National Congress of the Chinese Communist Party scheduled?

The 20th National Congress is scheduled for October 2022.

What impact might China’s stimulus have on the global economy?

China's economic stimulus is expected to have supportive impacts on the global economy.

Who is the portfolio manager at DoubleLine discussing China's economic policy?

Bill Campbell is the Portfolio Manager discussing China's economic policy.