The South China Morning Post recently sparked widespread interest in the financial sector with an article alleging that Xi Jinping had directed the People's Bank of China (PBOC) to resume trading government bonds. However, this claim seems exaggerated, based on remarks made by Xi Jinping during a previous conference. Although five months have passed since the conference, the PBOC has taken no action. The sudden spotlight on this issue raises questions: Is the PBOC intentionally ignoring the directive? Why did the South China Morning Post highlight it? Does the PBOC's involvement align with fiscal deficit monetization? We examined the advantages and disadvantages of the PBOC's potential bond purchases. While it's unclear why the South China Morning Post emphasized this topic, the A-share market's rebound following its report suggests significant influence. Despite speculation, immediate action from the PBOC seems unlikely, given the need to maintain the stability of the renminbi exchange rate and attract foreign investment.
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