Moody's: Reduced Credit Intensity of Growth Key to Achieving China's Policy Objectives

Moody's says that an increase in China's credit efficiency of growth is key to reducing leverage while meeting official growth targets and preventing a sharp increase in defaults.

Says China's National Financial Work Conference (this the country's financial policy direction every five years, and which concluded on 15 July 2017) has demonstrated a refreshed commitment to facilitate reforms to curb leverage among state-owned enterprises, companies as a whole, and the broader economy, to avoid the risk of a financial crisis
"The Chinese authorities will balance the competing aims of short-term, credit-fueled growth - which they target at around 6.5% in 2017 - and long-term policy measures to increase the resilience of the financial system and to reduce and eventually reverse the growth of leverage in the economy," says Michael Taylor, a Moody's Managing Director and Chief Credit Officer for Asia Pacific.