No fear of subprime crisis but caution is still the catchword

Macroeconomic statistics released over the weekend have sent a mixed message, that while growth remains weak, there are signs of stabilization. But as the recent boom in the real estate sector shows, policies targeted at stabilizing the economy could be misused, leading to risk accumulation and making it harder for policymakers to handle the situation in the future.

Both industrial production and retail sales increased at a slower rate in the first two months compared with December 2015, which means policymakers still face huge pressure to reduce overcapacity and stabilize growth.

The market is expecting the government to issue more policies to anchor the economy, and tax cuts, loosening of the monetary policy and fiscal stimulus are thought to be in the pipeline. From the latest development of the real estate sector, however, it is advisable that policymakers be more careful in devising economy-stabilizing policies.