China’s central bank – known as the People’s Bank of China (PBoC) is facing a policy dilemma. The slowdown in the domestic property market has worsened and most respected analysts believe that China is only at the halfway point of its housing market contraction. This would normally be a strong argument to reduce interest rates to stir demand. However, all measures show that there is ample liquidity provision in the banking sector – one-year prime lending rates have edged lower in recent months, meaning that consumers are worried about taking on loans, rather than a lack of credit availability itself.…

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