China Should Let a Hundred Defaults Bloom

Xi Jinping must decide whether he is more interested in stoking short-term growth, or curbing the excesses that imperil the China's future.
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April showers bring May flowers.

Photographer: MARK RALSTON/AFP/GettyImages

This week, Kaisa, a former poster child of China's booming real estate market, made history by becoming the first Chinese developer to renege on dollar loans. The immediate causes of Kaisa's default are clear enough: plunging property values left it with excessive debt. But it's still too early to know what Kaisa's failure will mean for China. Chinese President Xi Jinping must decide whether he is more interested in stoking short-term growth, or curbing the excesses that imperil the country's future.

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