China | Lehman Moment or Volcker Moment?

Economic slowdown will continue as the authorities are willing to sacrifice short-term growth figures to trade for long-term social equality and carbon neutrality, but it will not turn into either Lehman or Volcker Moment.

Key points

• Key points:
• October activities displayed a mixed picture of economic recovery amid the recent flurry of regulatory storms and growth model transformation.
• Both industrial production and retail sales showed some resilience in October, but the investment was dragged significantly by real estate slowdown with the contagion effect of Evergrande’ default.
• Monetary policy will be marginally eased but it does not mean a deluge of strong stimulus, while fiscal policy will be more proactive, focusing on processing local government bond issuance.
• The authorities are well aware of the growth deceleration and will strike a balance between stimulating growth and pressing ahead structural reforms going forward.

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