China pledges to take on the 'original sin' of its financial system
Leverage has grown over the past decade, a result of the expansion in domestic wealth seeking higher returns
Beijing
CHINA'S much-vaunted campaign to tackle its leverage problem has captured headlines this year. But to understand why they're taking on the challenge - and the threat it could pose to the world's second-largest economy - you need to dig into the mountain.
Characterised in state media as the "original sin" of China's financial system, leverage has swelled over the past decade, partly because policymakers were trying to cushion a slowdown in growth from the old normal. What's fuelled the leverage has been a rapid expansion in household and corporate wealth looking for higher returns in a system where bank interest rates have been held down.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
International
Vietnam tycoon appeals against US$27 billion fraud death sentence
US announces new restrictions on firearm exports
Central banks will probably only cut half as much as they hiked
US consumer sentiment falls as inflation expectations climb
HSBC wins £1.3 billion suit over Disney film finance scandal
WTO countries to reboot dispute reform negotiations