As China continues deleveraging the financial system, many international institutional investors believe that the process and stable economic indexes will fend off a free fall.
The Bank of England says that the Chinese economy saw better-than-expected growth in the first quarter, laying a solid foundation for the nation to reach its 6.5-percent target.
According to a report from the European Central Bank in May, emerging markets, especially China, were showing positive changes since the second half of 2016.
The Hong Kong and Shanghai Banking Corporation stated that as global consumption rises again, China’s private sector is recovering. After years of deleveraging, private enterprises stand ready for new opportunities with lowered debts.
The Algemene Bank Nederland said that the Chinese government has the ability and determination to avoid a hard landing. With an improving macro economy and stable exchange rates for renminbi, China’s foreign reserve will remain stable.
AXA Assets Management said the RMB exchange rates tend to balance after fluctuations caused by concerns over a strong US dollar and hard landing of the Chinese economy.
As concerns and pressure eases, Denmark-based Danske Bank Group also decided to raise its 3-month and 12-month forecast on the RMB exchange rate against the US dollar.
JPMorgan Asset Management spoke highly of the government’s increasing attention to corporate debts and risks of shadow banks, saying it is a positive signal to maintain stability of the country’s financial system.
Andy Seaman, chief investment officer with Stratton Street Capital in London, pointed out that deleveraging will help to avoid new systematic risks when coping with debt issues.
Confident about China’s debt issues, Seaman’s team is increasing its holdings in Chinese assets management companies that play significant roles in dealing with debt issues.
Union Bank of Switzerland said the gradually strengthened coordination among China’s central bank and supervision institutions relieved the market from concerns over an excessively tight credit environment
HSBC also believed that tightened regulations is necessary, and expects better policy coordination and adjustment in the future deleveraging process.
Standard Chartered Bank said that China will not have a large-scale debt crisis under the current financial environment, as the ratio of China’s foreign debts is less than 13 percent compared with high household savings.
Even taking the debt of local governments into account, the scale is still lower than other developed economies, indicating that China has enough policy choices to manage potential debt issues.
