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Old 28-01-2014, 13:47
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Default Re: Market news and trade recommendations by FBS

China: the imminent debt crisis?

The risk of a credit crunch is hanging over China. The pace of the nationís debt increase is extremely high. Chinaís local governments have public debt of $3 trillion. This week one of Chinese trusts has managed to avoid default, presumably, thanks to a bailout. Still, this raises many questions about the nationís financial future. The nationís extraordinary economic growth used to be a wonder and an example for others. However, it seems that this growth is now being built on the growing reliance on debt that will be difficult to repay. The existence of a huge shadow banking sector which, according to some estimates, equals 40% of GDP, makes the problem ever more serious.
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