Part 5/7:
On top of that, significant cash leaks to the government through tax payments heighten liquidity constraints. For banks, this has resulted in fortified lending practices; they are hoarding cash rather than facilitating loans, underscoring growing hesitance stemming from fears of default.
Currency Concerns
While all this unfolds, the Chinese Yuan (CNY) is also coming under intense scrutiny. The currency has been battling against depreciation, prompting the PBOC to intervene discreetly to avert freefall. The exchange rate of the CNY has frequently danced right at the edge of the official limit, further evidence of underlying systemic stress.