Government-reported GDP readings indicate that China’s economy maintained stable growth in Q1 2018. Growth derived from investment (capital formation) picked up, while growth derived from exports (net exports) dropped off.

Despite the comparative strength of the Q1 2018 GDP data, the April 17 RRR cut and the recent Politburo statements regarding supporting domestic demand indicate that China’s leaders may be considering easing measures to offset potential trade shocks and perhaps other weaknesses in the economy of concern to the leadership. It seems likely that any tweak to the country’s monetary policy will be modest given the high priority Xi Jinping and team have placed on "deleveraging" and "financial sector de-risking." Progress on deleveraging has arguably been minimal, at least insofar as the total debt book is concerned.