Credit implications of China’s emerging current account deficit
November 20th 2019 (5.02mins)
Martin Petch, Natasha Brereton-Fukui
Martin Petch and Natasha Brereton-Fukui from the Sovereign team discuss how the credit implications of a structural current account deficit will depend on both its size and how it is financed over the next decade. However, on balance, China’s government is well positioned to deal with the challenges it faces ahead.
Emerging current account deficit to challenge long-term financial stability, posing risks to credit quality
A shift into current account deficit will erode a key tenet of China's financial stability over the longer term, with the credit impact depending on the authorities' policy reform choices.