China's regulatory policy and environmental policies are unlikely to be eased, Jahangir Aziz, Head-Emerging Markets at JPMorgan, said on Tuesday. “The regulatory policy, and by that I mean environmental policy approvals etc, everything that goes into the regulatory side, is unlikely to be eased,” he said in an interview to CNBC-TV18.

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The remarks come at a time when China's factory activity has unexpectedly shrunk in September due to wider curbs on electricity use and elevated input prices. China's PMI reading was at 49.6 in September versus 50.1 in August.

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On the power situation, Aziz said, “The government is worried about it and they are coordinating the two planks: the reduction of the carbon intensity... the decarbonisation plan, and at the same time, making sure that the spillovers from that into the rest of the economy are limited. Therefore, our guess is that you are going to see an improvement in the power situation going ahead.”

He said that all commodities that have a negative impact on the environment are "in the line of fire".

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According to him, in the last three years, China has not supplemented macro policy easing or tightening with what is happening on the regulatory front. "This is the new reality," he said.

"The new reality is that the regulatory regime has shifted its objectives and now long-term and structural... and softness in growth etc. will be judged purely by macro policies and not by regulatory policy,” he added.

Watch the accompanying video to know more about the road ahead for Chinese factory output, the power outages and the outlook on Chinese policy.

First Published:Oct 5, 2021 4:07 PM IST