Pimco says China needs to get tougher in cat-and-mouse debt game

BEIJING (Feb 24): Beijing’s “cautious tightening signals” are largely being ignored by banks and at the local level, where attention is focused on maintaining steady economic growth, especially with key Communist Party meetings looming this year, according to Gene Frieda, executive vice president and global strategist for emerging markets at Pacific Investment Management Co.

“The cautious type of tightening usually doesn’t work that well for China” as it turns into a “cat-and-mouse game” between regulators and lenders, London-based Frieda said in a phone interview. “If there’s a willingness to allow credit to expand, credit expands. The only way to slow it down is to impose tight constraints.”

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