China: Trade war is still the biggest risk - ING
According to Iris Pang, economist at ING, the direct and clear direction on fiscal stimulus and loosening of monetary policy of Chinese economy indicates the top risk for the economy is the ongoing trade war with the US.
“The stimulus and the loosening credits to private enterprises and SMEs means that China is piling up debt again. and will undo its efforts to clean up debts in 2015-2017. Re-leveraging is the answer for 2019 to support pro-growth measures.”
“People will not realise this risk until the debts mature in 2022 - as the targeted medium lending facilities are three-year loans. But hopefully, by then, the trade war will have ended, and the economy will be strong enough to sustain another round of debt-clean-up.”