China M2 growth is off the lows. But M2 is around 220% of GDP, so 8.5% M2 growth this year is the same as 19% of GDP. Meanwhile if GDP grows 6% real and 2% CPI, so 8% nominal, M2 is growing 2.4x as fast as GDP. FAI is still over 42% of GDP and Construction 17%.
Meanwhile CNY is one of the most expensive REER FX rates with growing BoP pressure to devalue.
Devaluing, at least on a trade weighted basis including against the Yen and Euros would be a massive boost to the corporate sector in the face of sanctions and would support higher nominal GDP, wage growth, CPI and help reduce the credit intensity of growth.
My medium term JPY/CNY target is in the 7c's and 8c's later from 6.1 now. Its also a positive risk off trade as the Yen should rally in risk off.