China's PBoC cannot do QE

Speculation is running high that the People's Bank of China (PBoC) may soon implementsome unconventional easing programme. Some significant changes were expected to thePBoC's policy tool box for some time, but that at least half of the reason for the PBoC taking such action is to assist the fiscal reforms. 

With that goal in mind, a QE programme of directly buying government bonds is out of question. An LTRO-like programme is much more sensible and viable. The size can reach CNY 20tn eventually, depending on how the local government bond market will develop over the coming years.

But, the PBoC will probably try to keep it flexible and refrain from committing to a targeted size or pace or horizon upfront for the entire programme. This programme will be offered bit by bit, or at best year by year.