Trade war forces China to retreat against deleveraging

A Citi report released on Monday said the deleveraging pause would increase China's public debt-to-GDP ratio by 12.3 points to 274.5 percent by the end of the year, reversing a slight dip in 2017 .

"The markets are right, in our opinion, to feel more concerned about the sustainability of Chinese debt and the increased financial risks," Citi said.

Andrew Collier, general manager of Orient Capital Research in Hong Kong, said that there could be "leaks" in the Chinese debt economy, which means that those who need to credit will find a way to get it through the shadow banking system.

"So I'm not optimistic about significant deleveraging in 2019, which means that the current debt level should remain at current levels, or even increase, which could be disastrous," said Collier at the time of writing. 39, a conference on October 10. .

"At some point, you will have a situation of failure in different parts of the system," he said.

Collier mentioned the possibility of failures on the part of the municipal authorities, which he described as "more or less unheard of in China".

Ray Heung, vice president of the financial institutions group at Moody's Investors Service, said the Chinese government would continue to support the banking system, focusing on the big banks – but addressing the more Small banks having relationships with a local government role.

"We believe that one of the most important factors is social stability in China," Heung told reporters on October 10.