China’s latest efforts to curb risky debt levels are not only shocking local markets but raising worries globally about another market shock.

As a result, China has replaced Europe as the top worry for global money managers, according to the latest Bank of America Merrill Lynch survey published Tuesday.

Thirty-one percent of the 184 respondents consider Chinese credit tightening the biggest “tail risk” for markets. The second worry is a crash in the global bond market, at 19 percent, followed by trade war, at 16 percent.

Top market risks

Source: BofA Merrill Lynch Global Fund Manager Survey

The resurgence in China fears is the first since January 2016, the report showed. Back then, worries that a spillover from a sharp slowdown in China’s economy sent the Dow Jones industrial average and S&P 500 plunging in their worst start to a year on record.

In the nearly 18 months since, Chinese stimulus has helped the world’s second-largest economy stabilize. U.S. stocks, in turn, have recovered to hit record highs. Despite the UK’s surprise vote to leave the EU and a growing populist movement there, the major U.S. indexes haven’t fallen more than 10 percent from a recent high, or into correction, since the drop early last year, prompting Barclays Head of Global Equity Strategy Keith Parker to write in late February that “China is mattering as much as politics.”

Increased financial regulation in China has sent stocks lower and the 10-year government bond yield spiking to a high last week not seen in more than two years. The five-year bond yield also climbed above that of the 10-year in a rarely seen “inversion.”

Fears about China have increased while worries about Europe are on the wane. Centrist Emmanuel Macron’s decisive win in the latest French elections and pro-EU candidates in an upcoming German election have alleviated concerns that the EU could break up. The euro hit $1.1088 on Tuesday, its highest since Nov. 9.

China’s economic data isn’t getting better. The Caixin Markit manufacturing PMI fell to 50.3 in April, close to the breakeven 50 level and the lowest since September. The services PMI fell for a fourth straight month in April to 51.1, the lowest since May 2016. Trade data for last month missed expectations, while reports earlier this week showed softness in industrial production, fixed asset investment and retail sales.

The China worries also feed into existing worries about expensive stocks.

The BofAML survey found that 37 percent of respondents think global equity markets are overvalued. That’s the most since January 2000, just before the burst of the tech bubble.

On Monday, the Nasdaq composite, S&P 500, German DAX, and Hang Seng closed at records — survey respondents also said buying the tech-heavy Nasdaq is the most crowded trade.

Net % who think global equity markets are overvalued

Source: BofA Merrill Lynch Global Fund Manager Survey, CNBC annotation

Of major global indexes, only the China Shenzhen A Share market remains more than 10 percent below its closing high.

To be sure, only 11 percent of the BofAML survey respondents expected tighter Chinese monetary policy to “cause a meaningful drop in PMIs and cause financial market volatility.”

BlackRock’s Helen Zhu also said at a media panel last Friday that she sees the recent policy tightening as healthy and shouldn’t turn into extremely aggressive measures.

“I think the tightening is inevitable short-term pain [with] long-term gain,” Zhu said, noting like other analysts that Chinese policymakers are likely taking advantage of the improved economic growth to tighten policy, she said, noting that the rise in rates also follows the gains in U.S. rates.

It’s not in Beijing’s interests to allow significant financial and economic disruption in the next few months. The country is preparing for a key 19th Communist Party Congress this fall, at which President Xi Jinping is expected to shuffle leadership in consolidation of his power.

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