Aug
08
China Is Taking on the ‘Original Sin’ of Its Mountain of Debt
By-
Reducing leverage risks touted as top priority for regulators
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Wealth management products, entrusted loan levels remain high
China’s much-vaunted campaign to tackle its leverage problem has captured headlines this year. But to understand why they’re taking on the challenge — and the threat it could pose to the world’s second-largest economy — you need to dig into the mountain.
Characterized in state media as the “original sin” of China’s financial system, leverage has swelled over the past decade — partly because policy makers were trying to cushion a slowdown in growth from the old normal of 10 percent plus. What’s fueled the leverage has been a rapid expansion in household and corporate wealth looking for higher returns in a system where bank interest rates have been held down…
China Is Taking on the ‘Original Sin’ of Its Mountain of Debt
