Global Macro Service > Research Briefings > China

Financial tightening to continue, but more modestly

​The stronger-than-expected credit slowdown since December 2017 has led policymakers to take some action towards easing. Meanwhile, the government has put “boosting domestic demand” back on the policy agenda while de-emphasizing the task of “deleveraging”, fuelling speculation that China is shifting away from tighter financial policies.

We do not expect policymakers to make drastic changes in the policy stance and back away from reining in credit growth and financial risks. But recent developments signal that they want to keep their policy flexible and ease if that becomes necessary, so as to ensure credit growth slows down only gradually and modestly, and the impact on GDP growth is contained.

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