Tighter liquidity

Some economists have expressed concerns about tighter liquidity and a potential credit crunch in China as a result of strengthened regulation and tighter monetary policy.

"There could be some closures of small online financial platforms, possibly creating credit risks among banks and other nonbank financial institutions that have indirectly lent to those platforms through the interbank market and trust companies," Pang said.

"Overly tight liquidity could create tensions for banks and other financial institutions. But we see this risk as being quite low because the regulators manage liquidity on a daily basis."

Wang Tao, chief China economist at UBS Securities, said the PBOC will carefully manage liquidity conditions to ensure excessive tightening does not weigh on economic growth.

"With the ongoing tightening of financial regulations and supervision, the PBOC will need to carefully manage liquidity conditions to keep China's deleveraging implementation process smooth," Wang wrote in a research note.

Some economists interpreted the omission of specific targets for M2 and total social financing growth in the Government Work Report as an indication that the authorities intend to create more policy leeway and flexibility to address unexpected risks.

"The vague expression showed that the regulator does not want its policy to be labeled as either a tighter or a looser one. Instead, it hopes to use the expression to create more flexibility for its monetary policy," said Steven Zhang, chief economist at Morgan Stanley Huaxin Securities.