Abstract:
In 2021, the macro leverage ratio decreased to 263.8% from 270.1% at the end of 2020, achieving significant deleveraging. Given that the leverage ratio increased by 23.6 percentage points in 2020, it increased by 17.3 percentage points at the end of 2021 compared to that of 2019, and it is expected to take a long time for the leverage ratio to return to pre-Covid 19 levels. Compared with major developed economies’ strong stimulus policies that have an economy-wide impact, China’s macroeconomic policies are relatively restrained, highlighting cross-cyclical adjustments and the dynamic balance between stable growth and risk prevention, and leaving room for future policies. Under the “triple pressures” of shrinking demand, disrupted supply and weakening expectations, the macro leverage ratio is expected to rise from the current 263.8% to around 269% at the end of 2022, an increase of 5 percentage points for the whole year. During the 14th Five-Year Plan period and beyond, the shift in growth rate will continue, and the focus on steady growth will lead to rising debt pressure. Therefore, we believe that China’s macro leverage ratio is likely to enter an upward cycle, and the key factor affecting the trend of leverage ratio is economic growth.

Key words: Macro Leverage Ratio, Stable Growth, Risk Prevention