🚨Amid escalating trade tensions with the U.S., China is preparing to inject 600 billion yuan (~$83B) into the financial system through MLF.

👉🏻This is the first large-scale injection after several months of net liquidity withdrawal, marking an important shift in the strategy to stabilize the domestic financial market.

This is not the first time the PBoC has used this "medicine," but it has proven to be somewhat ineffective.

📌 Looking back, China remains committed to the trio of tools:

1. Cutting the RRR (required reserve ratio)

2. Lowering MLF interest rates

3. Large-scale liquidity injections

👉🏻The PBoC injects 600 billion yuan, but abundant liquidity does not necessarily mean an increase in M2 money supply. When confidence and credit demand remain low, money just circulates within the banking system. Vietnam in 2023-2024 is also injecting strong liquidity -> excess liquidity but weak credit turnover -> must withdraw back again.