Thread by @ChinaFinance40

While #deleveraging was a major task for China’s macroeconomic policy over past few years,it has been less covered in official documents lately. But its effects on economy still continue,both on micro entities and macroeconomy,cf40 member Wu Ge finds more: mp.weixin.qq.com/s/hMSgV0_gJYC6…

It is necessary to look into the effects of deleveraging on corporates’ balance sheet, which is helpful to understand changes in investment behaviors of micro entities and forecast the development orientation of macroeconomy.

To private firms, deleveraging has raised their capital costs; however, due to the “non-neutrality” of competition between private firms and #SOEs over the past 40 years, deleveraging can hardly fully explain rising fund costs of private firms.

Compared with private firms, #SOEs investment activities were constrained through the asset-liability channel as a result of deleveraging.

Looking ahead, with deceleration of deleveraging, capital cost for private firms is likely to fall, therefore helping relieve debt burden and recover investments. SOEs investment is likely to see marginal improvement thanks in part to a policy orientation of stabilizing growth.