Fiscal stance, pork reserves, PBOC easing

Headline government spending has started to contract but tax cuts mean that the budget deficit is still close to its widest ever and we think the fiscal stance will remain accommodative in the coming quarters. And while the PBOC underwhelmed expectations for monetary easing this week, we think that will start to change soon. Finally, the release of frozen pork from the government’s strategic reserves will do little to prevent African Swine Fever from pushing inflation even higher in the coming quarters.