Finance
China Tries to Cool Down an Easy-Money Financial Trade
Companies borrowing to put money into a hot financial product called structured deposits may be holding back a recovery.
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With the global economy reeling from the novel coronavirus crisis, Chinese policymakers want to encourage lending so companies can stay alive and grow. The People’s Bank of China injected a net 1.4 trillion yuan ($198 billion) into the financial system during the first quarter of 2020. But recently it’s ratcheted some of those efforts back with moves that helped send corporations’ costs of funding to a five-month high.
Why would the central bank do that? It may be trying to control the growth of a hot financial product known as structured deposits.