The View | Pockets of opportunities in the uncertain China market

One way to make money in financial markets is to bet on unanticipated events, but these days surprises can be hard to come by.

Only a few decades ago, the Federal Reserve used to make its monetary decisions in secret, informing the market weeks later. Nowadays the Fed, like the European Central Bank, telegraphs policy adjustments well in advance. It’s like the “jazz hands” version of monetary policy: try to act noiselessly, so as not to upset those economic actors who may suffer trauma.

Japan occasionally attempts surprises, like the laying on of another gazillion trillion yen in quantitative easing unveiled earlier this year. But after two decades of virtual zero interest rates, and more than three years of Abenomics’ turbocharged quantitative easing (QE), it’s hard for the Bank of Japan to produce any more shock and awe.

This leaves it up to China to offer the excitement of the unexpected, such as last August’s world-shaking devaluation of the yuan.

The latest cause for uncertainty is a lengthy May 9 interview in the People’s Daily newspaper with an unnamed “person of authority”. This person averred that excessive debt levels are economically risky, and that China should shut down excess capacity rather than adding more. That same point has been officially declared in many instances – it is line with President Xi Jinping’s “supply side” reformist agenda – yet it clashes noticeably with the actual trend of hefty credit expansion.