Is China Entering a Balance Sheet Recession?

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Founder & Head of Research, Fortress Hill Advisors

Alex Ng

Founder & Head of Research

Fortress Hill Advisors

Founded in Hong Kong in 2019, Fortress Hill Advisor seeks to provide premium economic and financial researches.

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Macroeconomics

<ul>
<li>Overall, we maintain the view that parts of China’s household sector are showing signs of a balance sheet recession, due to the buildup of debt in the past 20 years.</li>
<li>The non-financial corporate sector is more difficult to interpret, due to strength for SOE/high tech manufacturing and private sector confidence being less impacted than consumers.  </li>
<li>Fiscal policy is favored in this environment, as interest rate cuts alone risk being ineffective for sections of the household sector. </li>
</ul>


Overall, we maintain the view that parts of China’s household sector are showing signs of a balance sheet recession, due to the buildup of debt in the past 20 years.
The non-financial corporate sector is more difficult to interpret, due to strength for SOE/high tech manufacturing and private sector confidence being less impacted than consumers.  
Fiscal policy is favored in this environment, as interest rate cuts alone risk being ineffective for sections of the household sector. 


Balance Sheet Recession in China's Private Sector ?