China's monetary shift signals economic worries, but ‘bazooka-style' stimulus is unlikely, experts say

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China's monetary shift signals economic worries, but ‘bazooka-style' stimulus is unlikely, experts say
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Despite a flurry of stimulus measures, recent economic indicators have showed the world’s second-largest economy is still struggling with deflationary…

Chinese government in 2008 had unleashed a"historically large monetary stimulus in response to the global financial crisis," Gabriel Wildau, managing director of Teneo said.

China's top leadership surprised the market Monday by signaling a shift in its monetary policy stance after 14 years, indicating the economic challenges facing the country are quite entrenched, yet an outsized stimulus is unlikely, according to experts.since the depths of the global financial crisis in 2008

"Potential monetary easing leeway is much more limited than 15 years ago," said Tao Wang, head of Asia economics and chief China economist at UBS Investment Bank, who expects"over 50 basis points policy rate cut" over the course of next two years. The debt swap program needs to be significantly scaled up to offset the local government financial vehicle debt, which was nearly half of the size of country's GDP, economists at Morgan Stanley said.

Pang expects the central bank to cut the reserve requirement ratio, or RRR, a key lever to adjust liquidity, within a month.More details on Beijing's macro policy plans will be revealed at the annual economic work conference, that is reportedly underway and will end Thursday, UBS' Wang added.

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