Lastly, it is imperative that the slowdown in the housing market causes slower sales and a slacker demand for raw materials, furniture and household goods, thus putting pressure on future growth of the economy. Given this constraint, it is unlikely that the officials would revert to tighten monetary policy. However, there still more room in which fiscal policy would ultimately position the world’s second-largest economy back on track for a sustainable growth path.
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Contributed by Asset Plus Fund Management