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Is China On The Brink Of The Next Big Financial Crisis?

“The IMF supported this approach, noting that tensions had emerged in various areas of the Chinese financial system” writes Larry Elliott for theguardian.com. The IMF also noted developments in the Chinese financial system similar to those in the US in the years before the financial crisis of a decade ago.The IMF’s health check of China’s financial system found that credit was high by international levels, that personal debt had increased in the past five years, and that the pressure to maintain the country’s rapid growth had bred an unwillingness to let struggling firms fail.There had been a commitment to supporting growth and jobs, coupled with pressures to keep non-viable firms open.The credit needed to stimulate higher growth had “led to a substantial credit expansion resulting in high corporate debt and household indebtedness rising at a fast pace, albeit from a low base”.
 
Source: theguardian.com



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