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Systemic Risk (I): Shadow Banks and Local Debt

Abstract

As the Impossible Trinity descends upon China, exposing it to external shocks and policy choice dilemma, a major concern has emerged about systemic risks derailing its structural reform programme. The main worry focuses on China’s shadow-banking market, to which the official banking system is tied. Some observers even see Chinese banks as the world’s biggest systemic risk (Wall Street Journal 2014). There is also a worry about local government debt, which amounted to about one-third of China’s GDP in 2013. Owing to its rapid rate of growth, at an estimated 67 per cent a year between 2010 and 2013, some analysts worry that local government debt has grown so fast as to become a major national burden and an international concern (Economist 2014).

Keywords

Local Government Moral Hazard Systemic Risk Structural Reform Fiscal Revenue 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Chi Lo 2015

Authors and Affiliations

  • Chi Lo
    • 1
  1. 1.Economic StrategistHong Kong

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