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IMF warns over risks for Chinese economy

Graham Watson

8th December 2017

The IMF is concerned about the state of the Chinese banking system, and the implications of this for Chinese growth.

According to the report, stress test reveals four fifths of China's banks need more capital, as rising debt makes the Chinese banking system vulnerable.

The Wall Street Journal reports that "China’s financial system has grown rapidly in size and complexity, nearing 470% of the size of the economy last year, from 263% in 2011."

However, you need to be aware that the state-controlled nature of the banking system make it more opaque than other economies, and, thus far, it hasn't collapsed, despite other such warnings. 

That said, it doesn't mean that it's not going to collapse in future and levels of debt and non-performing assets are clearly a concern.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to Tutor2U, reads voraciously and is interested in all aspects of Teaching and Learning.

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