January 2, 2021

China's economy appears to be bouncing from a "mini-downturn" into an upswing as the country eases policy, according to investment bank Morgan Stanley.

The Asian giant had tightened its monetary policy, embarking on "aggressive deleveraging" as it sought to slash debt in the property sector. It managed to cut the debt-to-GDP ratio by 10 percentage points in 2021 — a magnitude not seen since the 2003 to 2007 period, according to Morgan Stanley in a Dec. 21 report.

But, the bank said: "The pace of tightening proved to be too aggressive, considering that the recovery in consumption growth was curtailed because of the Delta wave and China's continued Covid-zero approach, which kept consumption below trend."

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