Regulatory merger keeps China on course for deleveraging

The combination of banking and insurance regulators offers an opportunity to co-ordinate debt reduction measures

A key measure of leverage in China has dropped to its lowest level in almost five years, offering hope that the country’s efforts to improve regulatory co-ordination and channels for financial intermediation are bearing fruit. But authorities can’t rest on their laurels yet, and clearly need to stay the course to avert any systemic shocks.

The credit-to-GDP gap – the difference between the private non-financial sector credit-to-GDP ratio and its long-term trend – slipped to 16.7% in the third