Xi Makes Unprecedented PBOC Visit Amid Property Sector Turmoil

China’s continuing economic slowdown and turbulence in property markets have the potential to spark damaging reverberations across the global economy. In an attempt to shore up the economy and financial markets, President Xi Jinping visited the nation’s central bank for the first known time, according to Bloomberg, citing people familiar with the matter. 

Xi, Vice Premier He Lifeng, and other top officials visited the People’s Bank of China and the State Administration of Foreign Exchange on Tuesday afternoon, the people said, adding that Lifeng also visited the nation’s sovereign wealth fund.

The details of the visit were not clear but might indicate to investors potential policy signals and a centralized and unified leadership over the financial industry. Public record visits show this is the first time the most powerful Chinese leader has appeared at the PBOC since Mao Zedong. 

The visit comes as policymakers have been trying to put out the flames in the collapsing property market while unleashing stock market interventions, liquidity injections by the PBOC, and curbs on short selling to shore up the financial sector. Bloomberg noted the visit might “help ease concerns among some investors that the president had been neglecting the economy amid a purge of senior ministers and a volatile relationship with the US.” 

One person explained Xi’s visit to the foreign exchange regulator is to better understand the country’s $3 trillion reserves. And it comes one week before top leaders discuss financial policy and medium-term priorities in a closed-door economic policy meeting. 

In recent weeks, Chinese macro data has improved.

Bloomberg’s Chang Shu and David Qu noted that China’s recovery could be gaining traction, supported by stronger public investment and monetary easing. 

…and overall, China data has surprised more to the upside in recent months (admittedly against very weak expectations)…

However, China’s Credit Impulse remains negative. 

And China’s Property Stock gauge plunged to its lowest since 2009…

Xi’s visit hints that the PBOC might pull out the monetary stimulus cannon, which as refrained from using, as well as aggressive direct market interventions.