China's government has made corporate-sector deleveraging a major goal for 2016, but its state-owned enterprises are still holding far too much debt. The government should now turn to the private sector, which has accumulated savings and needs new investment opportunities, to help clean up the SOEs' balance sheets.
BEIJING – China’s economic slowdown has been the subject of countless debates, discussions, articles, and analyses. While the proposed remedies vary considerably, there seems to be a broad consensus that the illness is structural. But while structural problems, from diminishing returns to capital to the rise in protectionism since the global economic crisis, are certainly acting as a drag on growth, another factor has gone largely unnoticed: the business cycle.
BEIJING – China’s economic slowdown has been the subject of countless debates, discussions, articles, and analyses. While the proposed remedies vary considerably, there seems to be a broad consensus that the illness is structural. But while structural problems, from diminishing returns to capital to the rise in protectionism since the global economic crisis, are certainly acting as a drag on growth, another factor has gone largely unnoticed: the business cycle.