We highlighted the rising macro risks in last week's note. Since then we noticednew signs of tightening in fiscal and monetary policies. On the fiscal front, theMinistry of Finance issued a document on 16 Nov to tighten control over publicprivate partnership (PPP) projects. To control the potential fiscal burden, thegovernment will cancel some PPP projects that do not meet its requirements.    Moreover, the government will likely revise a guideline on subway projects soon,according to a major Chinese news agency Caixin. The Rmb30bn subway projectin the city of Baotou has been called off by the central government after 3 monthsof construction. Caixin reported that the guideline will likely become tougher, toprevent subway projects to be built in cities with inadequate population and poorfiscal condition.    On monetary front, the government released a draft of guideline on the assetmanagement sector on 17 Nov. Our banking team has published a detailedreport (see their note Asset Management Guideline - Reshaping China's shadowbanking). The asset management sector runs on Rmb102tn of assets (137% ofGDP), investing heavily in bonds and nonstandard credit assets. From macroperspective this guideline will structurally constrain financial leverage and furthertighten credit growth. Hopefully it will also mitigate the moral hazard problemfrom the implicit guarantee in the wealth management products.    It makes sense for the government to tighten policies. The Party Congress is over.    Economic growth surprised on the upside so far this year. Meanwhile macro risksremain alarming. As we discussed in a recent report "Revisiting the LGFV debtissue", infrastructure investment growth will likely slow in 2018. The focus of theleaders is likely shifting toward containing risks and making the growth modelmore sustainable for the next five years.    These measures in fiscal and monetary policies are positive for China in the longterm. However, in the next 6 months they will likely bring the economy to slow andcause some volatility in the financial market. We maintain our growth forecast of6.6% in Q4, 6.3% in Q1 and 6.1% in Q2. The big question on our mind is: whathappens when growth slows in H1 to below 6.5%? As a baseline case we expectthe government to loose policy in the property sector, particularly in the tier 2cities. Growth would stabilize at 6.3% in Q3 and 6.5% in Q4 in such a scenario.    Inflation and interest rates remain the key risks to watch.

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