China: Much ado about something
Policy measures taken by the Chinese authorities show they are serious about combatting risks to growth. These were the consequence of earlier efforts to deleverage, but are now being compounded by the developing trade war. The steps are significant enough to negate the need to retaliate with a weaker renminbi and should offset the drag tariffs will have on net trade. We are neutral on the renminbi versus the US dollar. This shift is not yet reflected in domestic equity prices, which have been dulled by the protectionist cloud. We would be long Chinese equities.