VIEW: ANZ suggest that "China is about to.....>

CHINA: VIEW: ANZ suggest that "China is about to repeat the debt-deflation cycle

seen in 2012-15 which was caused by a slump in demand. We expect the nation's

debt levels to spike more than 12% by the end of 2020, while producer prices

shrink 2% Looming anxieties about China's macro-leverage ratio will not deter

policymakers from implementing more easing measures this year, in our view. If

the authorities reiterate at the upcoming People's Congress that "the increase

in aggregate financing to the real economy and M2 money supply growth roughly

matches or is slightly higher than nominal GDP growth", we interpret it as a

signal for further rate cuts this year. Chinese policymakers will likely flatten

the policy rate curve with cuts in the longer tenors to achieve the dual goals

of boosting inflation and preventing financial market speculation. We expect the

7-day reverse repo rate to be trimmed by 20bps to 2.0% while the 1Y medium-term

lending facility (MLF) rate will be lowered by 45bps to 2.5% by year-end. In

addition, slashing the reserve requirement ratio (RRR) by at least 100bps for

large banks will also lend support to the special treasury bonds issuance in Q3,

in our view."