The fiscal briefings from China last weekend were exactly what we feared and have been warning about—a big nothing burger. China keeps applying supply-side measures to a demand-driven problem, which is unlikely to succeed. What China really needs is a forced increase in demand across the system, but instead, they’re focused on trying to incentivize demand for assets or reshuffle credit profiles.

The “whatever it takes” moment is far closer in U.S. markets than in China, and those fixated on China may miss the boat. So far, our regime model for China has responded to two key parameters. First, growth spiked—likely due to holiday travel and a liquidity boost following the PBoC’s recent interventions. However, growth is dwindling again, and the latest fiscal briefing offered little new information on the use of special bond issuances. Instead, it simply reiterated the availability of 2.3 trillion yuan ($325 billion) in special local bond funds for the rest of the year. This isn’t new, and anyone celebrating these “special bond issuances” as fresh fiscal stimulus should frankly be considered China-tourists.

We aren’t seeing extraordinary bond issuances compared to recent years, and the so-called stimulus is not new—if this is all that the authorities plan to offer.

The effort to shift risks from regional to national government by allowing these bond issuances to be used for buying unsold homes (with 100% backing) is a positive step. However, remember that nearly 15 trillion yuan worth of unsold homes exist in just the 30 largest cities.

If Chinese authorities are attempting to alleviate credit and duration risks for private investors, it’s, at best, a marginal effort. All this feels like a sugar rush with no substance.

Chart 1.a: We are fading the spike in growth for now