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Finance Should Return to Common Sense, Original Purpose

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Finance Should Return to Common Sense, Original Purpose

Caixin,

5 Minuten Lesezeit
5 Take-aways
Audio & Text

Was ist drin?

China’s high debt levels may come to haunt the world economy’s biggest growth catalyst.

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Editorial Rating

7

Qualities

  • Eye Opening
  • Hot Topic

Recommendation

The International Monetary Fund expects China to remain the world economy’s biggest source of growth through at least 2027. While the Chinese economy continues to grow, experts inside and outside China are increasingly worried about the country’s high debt levels and the risk of a collapse in asset values. An editorial by the media portal Caixin Global explains the roots of China’s heightened financial risk and calls for wide-ranging regulatory reforms to contain it. getAbstract recommends the succinct essay to professionals in the financial industry.   

Summary

The governor of China’s central bank, Zhou Xiaochuan, warned in late 2017 that the country was facing considerable financial risk. High leverage is the cause of the Chinese financial system’s vulnerability. In 2016, China’s ratio between total debt and total assets was at 247%, a level commonly considered dangerous.

Local governments trying to circumvent the central bank’s borrowing restrictions currently pose the biggest danger to the system. For example, local governments have raised additional...

About the Author

Caixin Global is the English-language portal of China’s financial media group, Caixin Media. 

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