The guidelines have improved the quality of new lending by limiting the number of new mortgage holders that are highly indebted. Along with higher interest rates, the new guidelines have also limited growth in credit. As a result, we’re finally seeing the ratio of household debt to income stabilize. Second, China is deleveraging, which is critical for its economy and for the world.
We made this decision in light of the distance we have come in tightening policy, the uncertain lags in monetary policy, and the potential headwinds from credit tightening.