Courtesy of Credit Suisse:
We judge that Chinese government policy has tightened over the past several months. This supports our forecast for GDP growth to slow to 6.3% yoy in Q4. This tightening has not come as a concerted package aimed explicitly at slowing growth nor has it been severe. However, the last several months’ slew of changes to financial regulations, new housing market restrictions, and the recent pause in some types of policy bank lending should still add to downward pressure on growth. At the broad level of Chinese politics, we read the sum of recent policy action as reflecting a shift back toward President Xi’s “supply-side reform” program. This amounts to a push for debt restructuring and consolidation of SOEs and away from willingness to tolerate any amount of leverage in pursuit of above-target GDP growth rates.
Policy is moving against shadow banking excess
