Because China's credit system has been designed around implicit state guarantees, much of the financing is misallocated to the economy’s less efficient, highly indebted sectors. As a result, the foundations of China’s growth miracle are steadily being eroded by a debt overhang that shows few signs of receding.
BEIJING – There is no better metaphor for the economic challenge facing China than the futuristic architectural masterpiece designed to house the country’s state television network, CCTV. A few months before the landmark building was to be completed in 2009, officials at the network conducted an unauthorized fireworks display, sparking a fire that consumed a smaller building in the complex, a wedge-shaped tower that Beijing’s residents had nicknamed the Termite’s Nest.
BEIJING – There is no better metaphor for the economic challenge facing China than the futuristic architectural masterpiece designed to house the country’s state television network, CCTV. A few months before the landmark building was to be completed in 2009, officials at the network conducted an unauthorized fireworks display, sparking a fire that consumed a smaller building in the complex, a wedge-shaped tower that Beijing’s residents had nicknamed the Termite’s Nest.