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Friday, May 18, 2018
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.

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