, Columnist
China Can’t Work Out How to Fix Its ‘Balance-Sheet Recession’
Policymakers face an unfamiliar economic conundrum. Who gets what is a hot-button political issue.
Tough decisions.
Photographer: Raul Ariano/BloombergThis article is for subscribers only.
China is at a crossroad. Recent data are so dismal that narratives in the mainland have shifted quickly from whether to stimulate the economy to how.
The country is entering a strange economic aberration its policymakers are not used to. It is exhibiting what some fear is a “balance-sheet recession,” in that rather than maximizing profit, people are busy minimizing debt. The cost of borrowing has come down, but consumers are not buying big-ticket items, using their savings to speed up payments on existing mortgages instead. Companies are not investing for the future, either.