In response to a slowing economy, China is gearing up for substantial fiscal and monetary measures. Expect a surge of new liquidity as the country’s leadership pledges stronger support for economic growth. The Communist Party’s Politburo emphasized the need for economic stability and announced plans for counter-cyclical adjustments and fresh initiatives, according to state news agency Xinhua.

The Chinese bond market has been treacherous for years and, due to the continuous fall in interest rates, indicates that the country is in a demographic and debt-related deflationary spiral. Since China also runs on the foundation of the Keynesian debt policy, it can be assumed that increasingly drastic measures will be taken in an attempt to expand the existing fiat money system in order to get back on a sustainable growth path.