China: Aggressive policy easing may come to an end soon – Deutsche Bank

Research Team at Deutsche Bank, notes that yesterday an article from China's People's Daily was released which provided some important signals that China's macroeconomic policy stance may turn from aggressive easing to a more neutral position soon in the eyes of our China economists.

Key Quotes

“They note that the article indicates that the government is generally satisfied with the economic performance so far this year. It recognizes that structural challenges facing the economy will take time to resolve, and economic growth in the coming years will likely take an L-shaped path, rather than a V- or U-shaped one.

The article also goes onto to say that the policy maker points out that adding leverage will not be effective in stimulating the economy at the current stage, and higher leverage could heighten systematic risks. With some focus also on the danger of indecisiveness when facing policy dilemmas, the context of the statement is a clear signal to our colleagues that the focus of the government will likely shift from promoting and stabilizing growth to control and the reduction of systematic risks in coming months. This leads them to believe that the aggressive policy easing seen in the past few months may come to an end soon.”