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PBOC bond trading, LGFV pullback

The PBOC has clarified that its plans to start trading government bonds are aimed at managing interest rate risk, not conducting QE. This reinforces our sense that large-scale monetary easing remains unlikely. On the fiscal front, a renewed decline in land sales in March, coupled with decreasing LGFV bond issuance, points to waning off-budget fiscal activity. This poses a threat to the current cyclical upturn in growth. 

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