With China again facing the specter of an economic hard landing, the country's leaders must devise a reform strategy that improves credit allocation, without creating new systemic risks. They should begin by eliminating the two-tier credit system, which is generating serious risks.
HONG KONG – China’s economy is again facing the specter of a hard landing. Property bubbles, mounting local-government debt, and wayward shadow-banking activities are generating considerable financial risk, complicating the government’s efforts to address rising labor costs, excessive credit, overwhelming pollution, rampant corruption, an undeveloped tax system, and rising international competition. And additional risks seem to lurk at almost every turn.
HONG KONG – China’s economy is again facing the specter of a hard landing. Property bubbles, mounting local-government debt, and wayward shadow-banking activities are generating considerable financial risk, complicating the government’s efforts to address rising labor costs, excessive credit, overwhelming pollution, rampant corruption, an undeveloped tax system, and rising international competition. And additional risks seem to lurk at almost every turn.