Battle Royale: Monetary Easing vs. Regulatory Tightening

Two trends are clear in Chinese economic policymaking in 2018: monetary policy easing, and regulatory tightening in the financial sector. The release of highly anticipated asset management rules over the weekend confirm that Beijing’s deleveraging campaign remains on track. However, whether or not regulatory tightening is effective in limiting shadow banking growth while short-term rates move lower has critical implications for China-linked asset markets in 2018. In this note, we discuss the key indicators to watch in this ongoing battle.

Posted April 30, 2018
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