Economics
China Credit Surge Fuels Economic Stabilization, Debt Concerns
- Aggregate financing topped all but 2 of 28 economist forecasts
- IMF paper warned of credit risks if overcapacity not addressed
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China’s broadest measure of new credit exceeded estimates in September to fuel the economy’s continued stabilization and at the same time underscore escalating concerns over a property binge and the pace of debt expansion.
With a credit-binge having succeeded in stabilizing the economy, policy makers are switching focus to reining in soaring home price gains that cheap borrowing costs have spurred. China urgently needs a plan to address a build up of corporate debt that’s manageable but with a window to address it "closing quickly," according to an International Monetary Fund working paper.