China’s Shadow Menace
The US Federal Reserve’s move to exit from quantitative easing is stoking fears of a hard economic landing in China. But China’s strong economic fundamentals mean that policymakers have the space to avoid such an outcome – as long as they get the country's shadow banking system under control.
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BEIJING – The US Federal Reserve’s decision to exit from so-called “quantitative easing” – its massive monthly purchases of long-term assets – is stoking fears of a hard economic landing in China. But China’s strong economic fundamentals mean that policymakers have the space to avoid such an outcome – as long as they bring the country’s shadow banking system under control.