3 Factors Affecting China's Economy Other than Tariffs | Page 2 of 2 | ETF Trends

“I think the slowdown is primarily a result of the slowdown in credit,” said Lardy. “By the end of last year, credit was growing at the slowest pace in 10 years.”

In the meantime, China is trying to stimulate the economy by cutting bank reserve requirements to help promote more lending activity.

Less Consumer Spending

Of course, tighter financial policies in the past have led to less consumer spending as the amount of credit available deteriorates. Even as the government gets more lax on monetary policy, consumers are less inclined to accept the credit in the face of economic uncertainty in China.

“We also notice households have taken on some debt in recent years, and we think some of them might be reaching their limits,” Christopher said. “Households, we think, are feeling a little bit of a pinch.”

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