Decoupling Ahead

Despite the PBOC’s delivery of higher interest rates on short-term liquidity immediately after the Fed’s 25 bps hike, China’s economic trajectory is more likely to diverge from the US-led global recovery over the next two quarters. At the same time, China’s monetary tightening push is not a reactive response to an improvement in cyclical indicators or inflationary pressure, but is a longer duration proactive attempt to manage systemic financial risks.

Posted August 1, 2017
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