China’s half-hearted stimulus

CHINA ADVISORY - Report 10 Jan 2020 by Andrew Collier

China is entering 2020 with a weak response to the economic decline. Beijing is accepting slower growth as one of the casualties of avoiding excessive investment that would lead to inefficient growth and the potential for financial systemic risk. However, in place of a substantial monetary or fiscal government stimulus, China is substituting private credit for public lending. What does this achieve? It begins to eliminate the implicit state guarantee while providing capital for growth.

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