Preventing an Evergrande Confidence Crisis in China
A looming default by the Chinese property developer Evergrande has sent shock waves through global capital markets. The Chinese government and central bank have the means to prevent a full-blown financial crisis, but they need to communicate their strategy now in order to calm jittery investors.
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NEW YORK – Many have attributed the recent decline in major global stock market indices to concerns about the heavily indebted Chinese property development group Evergrande. To restore investor confidence and minimize economic damage, the Chinese authorities must eliminate any doubt that they will do what is necessary to contain potential spillovers from an Evergrande default.