China debt-fueled stimulus might provoke recession
China might undergo a sort of financial crisis, gradually transforming into economic recession if this country’s authorities put a lot of value on debt-fueled stimulus, as the official People’s Daily stated on Monday.
The official paper of the ruling Communist party, the People’s Daily, in its recent article quoted one person’s statement that excessive credit growth could drastically heighten risks and even generate a financial crisis in case of poor control.
It’s clear that risks can’t surge to the sky. Evidently, high leverage will generate high risks, which could provoke systematic financial crisis. Furthermore, it will most likely bring negative economic growth and affect people’s savings.
Therefore, it’s up to China’s government to get rid of the illusion of reducing leverage by easing monetary conditions to assist to accelerate economic growth.
Previously, the People’s Daily made use of reports quoting an “authoritative person” to draw attention to essential points of the country’s economic policy.