Notes from Ningbo

CHINA ADVISORY - Report 29 Nov 2019 by Andrew Collier

We just spent three days in Ningbo, China’s largest port city, 200 km from Shanghai, visiting finance companies, banks, and regulators. Four quick conclusions:
1) The trade war is having less economic impact, even on a port city, than one would expect.
2) The crackdown on shadow banking and unregulated financial flows in general is continuing, to the credit of the PBOC.
3) Local regions often interpret Beijing regulations “creatively,” leading to wide differentials in credit flows.
4) Beijing is clearly moving back toward a fiscal stimulus but is (rather desperately, in our view) attempting to steer clear of systemic risk. This is strategy by “threading the needle” that ultimately cannot avoid financial risk, albeit limited by geography or sector.

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