Not a balance sheet recession, yet

Weak credit data has stoked fears of a balance sheet recession in China. While the economy is still far from reaching that point, the private sector will eventually start to cut down on its borrowing if the economy continues down its current path. Meanwhile, home sales resumed their decline in a further sign that the government's property rescue package has had little impact. And we remain sceptical that the government will start to provide consumer handouts, despite continued calls from experts to do so.