Headwinds Keep PBOC Easing On Track

China’s economy is facing unprecedented pressures from the deleveraging campaign internally and the trade conflict externally, while local government financing conditions are deteriorating rapidly. These headwinds point to additional PBOC monetary easing steps, but Beijing will not abandon the overall objectives of the deleveraging campaign. The yuan should stay under pressure because China’s monetary policy trajectory is diverging from the United States, but there are reasons to expect economic data will start to improve in Q4.

Posted September 4, 2018
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