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Chinese credit cannot continue to grow at the current pace: RBC

An employee counts yuan banknotes at a branch of Bank of China in Taiyuan, Shanxi province. European and U.S. officials have been pressing China for years to do more to open up the yuan to market forces.

STRINGER SHANGHAI/REUTERS

Globe editors have posted this research report with permission of RBC Global Asset Management. This should not be construed as an endorsement of the report's recommendations. For more on The Globe's disclaimers please read here. The following text is excerpted from the report:

Chinese credit has probably grown too quickly over the past five years. The booming shadow-finance sector is set to slow materially as policy makers clamp down on wealth management product excesses.

Local-government debt loads continue to bulge as infrastructure projects are undertaken, but new bank lending limits should slow this progress.

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The housing market is not as overcooked as it looks, but must nonetheless cool.

China has shown an uncanny ability to avoid potholes, but the credit-related downside risks it faces over the coming year are not trivial.

Going forward, less electric credit growth should dim economic growth.


Read the full report here.

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