Is Higher Financial Stress Lurking Around the Corner for China?

Abstract

Despite China’s tighter financial policies and the Evergrande troubles, Chinese financial stress measures have been remarkably stable around average levels. Chinese financial conditions, though, are affected by global markets, making it likely that low foreign financial stress conditions are blurring the state of Chinese financial markets. In this post, we parse out the domestic component of a Chinese financial stress measure to evaluate the downside risk to future economic activity.

Citation

Groen, J. J. J. and A. I. Noble (2021), “Is Higher Financial Stress Lurking Around the Corner for China?” Liberty Street Economics, November 23 2021, Federal Reserve Bank of New York.