China's De-leveraging will Tighten Its Monetary Policy
ANBOUND
The source of China's financial risk is the high
leverage rate. Anbound observes that the problem of high leverage rate is
concentrated in areas such as state-owned enterprises (SOEs), local
governments, non-performing assets, and 'big asset management'. Focusing on
these key risk areas in the coming years will require tightening monetary
policy. The Central Government once stated that if there is no monetary
control, de-leveraging will not bring forth results. This means that in the
future, if the focus of de-leveraging and financial risk prevention remains
unchanged, monetary policy will continue to remain tight. At this time, it
would be necessary for China to cope with economic problems through financial
policies.