Making sense out of Beijing`s recent financial direction is hard, even for veteran political and financial analyst Victor Shi. In the Wall Street Journal, he tries to give it a shot. “As with any addiction program, the first step is to admit you have a problem.”
The Wall Street Journal:
“It’s really difficult for the Chinese government to regain global confidence because it’s really difficult for them to actually deleverage, since that could lead to a financial crisis,” said University of California, San Diego professor Victor Shih, who calculates that interest on China’s existing debt now accounts for 20% of GDP. “They’re walking a very tight rope.”
The week’s articles follow other zigzag moves. After pledging in 2013 that Beijing would let the marketplace take a “decisive” role in the economy, Mr. Xi’s administration intervened aggressively last summer when the stock market fell, then sparked fears of a global currency war in August when it rolled out a new currency-management system with little warning.
Mr. Shih said the articles included no specifics on how China should tackle its debt habit, although the unnamed person in Monday’s question-and-answer article appeared to nod at the scale of the challenge, even citing the risk of a “crisis.”
“As with any addiction program, the first step is to admit you have a problem,” Mr. Shih said.
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