China: Fears of deeper trouble - AmpGFX
Greg Gibbs, analyst at Amplifying Global FX Capital, points out that more commentators are mulling whether we are in the midst of the big China slowdown and whether a major reset is needed after years of excessive credit growth.
“There are reports that business and consumer confidence in China have slumped to levels not seen in previous slowdowns over the last decade or more. Private business is feeling the credit tightening more severely. The crackdown on shadow finance, including troubles that have emerged in peer-to-peer lending and share-pledge financing, has had a significant and long-lasting dampening impact on private enterprises that are not likely to be easily reversed by government measures to encourage more bank lending to this sector.”
“There are concerns that state-owned enterprises remain bloated and inefficient and retain preferential access to bank credit. And the government efforts to contain shadow finance are disproportionally dampening the more dynamic private sector that has the best chance to drive future economic growth.”