context: Official PRC media are generally upbeat in H1 2023, but the policy reversals of Q4 2022 make this appear to many as whistling in the dark. 'Vigilance against the impact of the balance sheet’ is called for by the 'abnormal trend of financial data,' warns Li Yang, CASS (Chinese Academy of Social Sciences) vice-president. |
Phenomena typical of balance sheet shocks have now appeared, said Li Yang 李扬 CASS vice-president and Finance and Development lab chair at the 8th China Bond Forum (6 Jan 2023), noting
Now facing the risk of a balance sheet recession, said Li, we will have to make great efforts to resolve it in the near future. The PRC bond balance exceeded CN¥141 trillion in late December 2022, he notes, though China is still the world’s second-largest bond market. He pointed out
That the proportion of fiscal revenue in GDP has declined is the biggest problem worthy of attention, Li said. The proportion of the PRC’s fiscal revenue to GDP began to decline in 2016; it has now dropped to a level equivalent to 17.7 percent of GDP. Li hence suggested that economic recovery requires comprehensive measures
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