Specifically, it is necessary to pay close attention to whether, in grappling with various challenges such as overcapacity in the manufacturing sector and income disparities to achieve stable growth, the authorities can restrain credit expansion, such as in the shadow banking system at a pace exceeding economic growth, while steadily proceeding with structural reforms and rebalancing the economy from investment to consumption.
Uncertainty regarding the European debt problem remains, even though the extreme tail risk of a potential disintegration of the euro, which some had feared at one time, has receded. However, market tensions could rise yet again if efforts to strengthen economic and financial union of the euro area and to push through fiscal reforms are seen to be in retreat.