PBOC Governor Pan Gongsheng wrote in Qiushi that growth in China’s financial
aggregates has slowed, which supports keeping macro leverage broadly stable. He
said the recent rapid rise in macro leverage reflected countercyclical policy
that boosted financial aggregate and debt growth while low inflation weighed on
nominal GDP. The financing market has shifted from supply constraints to demand
constraints; effective financing demand can be met and social financing
conditions remain relatively loose. He urged balancing short- and long-term aims
and warned against financial aggregate growth outpacing real-economy demand,
which could create idle funds, lift macro leverage further, impede clearance of
excess capacity and inefficient firms, and hurt economic efficiency.
