Victor Shih |
The New York Times:
More at the New York Times.In the early years of China’s boom, companies and local governments could borrow liberally knowing that accelerating growth could help ensure that their gambles paid off. Now that the country’s economy is huge and maturing, it has become increasingly difficult for China to simply grow its way out of its debt.“China already is in the midst of the largest credit bubble the world has ever seen,” said Victor Shih, an associate professor at the University of California, San Diego. And, Professor Shih added, the Chinese government has not been able to wean itself off its debt habit.“The government simply cannot afford to think about the medium term and must focus on short-term continuation of the credit bubble,” he said.The latest round of government-driven financial largess was remarkable in size and scale, economists said.
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