Bankruptcy: only way to reduce debt – Victor Shih

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victor shihChina is carrying a huge load of debts, and the only way out is to allow failing companies to go bankrupt, says financial analyst Victor Shih to Bloomberg. That fix should be part of the upcoming new 5-year plan, he says.

Bloomberg:

Policy makers should reduce debt by allowing thousands of heavily indebted and unprofitable enterprises to go bankrupt, says Victor Shih, a professor at the University of California at San Diego who studies China’s politics and finance.

“China has chosen to continue to inflate the debt bubble and to generate growth,” he said. “But no country can do so forever.”

More in Bloomberg.

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