Beijing may be pulling on levers that aren’t connected to anything

Western analysts are too optimistic in believing that Beijing has full control of all of the state’s financial and fiscal levers, and that the state is willing or able to support all credit in China, GlobalSource argues on February 1. The reality is that current Chinese stimulus measures are likely to be inadequate due to restrictions imposed on shadow lending. This is likely to mean a potential property market downtrend, defaults of property developer bonds, and a continued increase in SME defaults. The potential for bond defaults, GlobalSource suggests, has not been priced in to global Chinese credit.