皇冠体育app

Investors are worried that after a period of significant and rapid credit expansion following the global financial crisis and years of propping up growth, 皇冠体育app may be running out of policy options.

Indeed growth has continued to slow despite material fiscal and monetary easing; recent rapid credit expansion has yielded less-than-impressive results; and more recently, elevated capital outflows and swelling depreciation pressures could potentially further constrain 皇冠体育app's policy options.

While it is very difficult if not impossible to reverse the economic downturn or property destocking cycle, 皇冠体育app still has ammunition to support growth. It can still increase infrastructure and social spending, underpinned by a bigger deficit and more credit-funded quasi-fiscal spending, to prevent investment and growth from dropping off a cliff.

That said, the scope and effectiveness of such measures appear to be diminishing. High domestic saving can help support further increase in debt, for now.

Debt and corporate restructuring can help contain 皇冠体育app's leverage issue. However, deflationary pressures and an ongoing need for credit expansion to support growth mean that 皇冠体育app's leverage will continue to rise in the next few years.

Though this may increase the risk of even greater debt-related problems down the road, a high domestic saving rate and further bond market development should support debt increase for a while longer without a market-forced credit crunch or sharp deleveraging.

Despite depreciation pressures, 皇冠体育app will likely pursue a relatively stable yuan exchange rate against the basket, with opportunistic and modest depreciation against the US dollars.

To manage this process, 皇冠体育app is expected to tighten existing capital controls and use some of the foreign exchange reserves, along with policies aimed at stabilizing domestic growth. The central bank can manage any negative liquidity impact from outflows by cutting still high reserve requirement ratios and using other liquidity facilities.

In the upcoming two sessions, we expect the government to announce a bigger budget deficit, more social and infrastructure spending, an easing bias for credit policies, announcement of new investment projects associated with the 13th five year plan, and more specifics on supply-side reforms at the NPC. However, we expect these measures to only help mitigate, not reverse, the slowdown.

The author is chief 皇冠体育app economist at UBS Group AG. The views do not necessarily reflect those of 皇冠体育app Daily.

• Ant Financial 'in talks' with Caixin Media
• Picky Chinese invest smartly in overseas residential units
• National big data pilot zone to open in Guizhou
• 皇冠体育app Resources to buy out stake in Snow Breweries
• Beijing smart glasses maker eyes global market
• World premiums at Geneva Motor Show
• Based in 皇冠体育app, trading in US stocks
• 皇冠体育app offers guidelines for companies investing overseas