Mohamed A. El-Erian , Columnist

China Won’t Have a Typical 'Minsky Moment'

The threat of a financial crisis is lower than the general risks facing economic growth.

October 23, 2017 at 5:30 AM UTC

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

The PBOC's Zhou warned against complacency.
Photographer: Etienne Oliveau/Getty Images

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Zhou Xiaochuan, the long-serving and respected governor of the People's Bank of China, raised eyebrows last week when he cautioned that the country could have a "Minsky Moment" if "we are too optimistic when things go smoothly."

Although he was right to warn against policy complacency and general economic overconfidence, particularly in the context of a growth model that still relies too heavily on credit and debt, the Minsky threat of a financial crisis per se is lower than the risk of generalized downward pressures on economic growth should the policy effort falter.