Rescaling China’s Debt Mountain
The IMF estimates that 15% of Chinese loans to nonfinancial corporations are at risk, implying that the book value of the bad loans could be a quarter of national income. Policymakers have three options – none of them painless – for addressing the problem.
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MONTREAL – There is widespread agreement on two facts about the Chinese economy. First, the slowdown has ended and growth is picking up. Second, not all is well financially. But there is no agreement on what happens next.