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A Problem China Cannot Outgrow

Dec 29, 2016 | 09:15 GMT
A Problem China Cannot Outgrow
Beijing appears to be on the verge of making a difficult choice: Sacrifice growth (and by extension, political support) to tackle Chinese debt head-on, or risk suffering the same debt-driven banking crisis seen in so many countries.
(SAM YEH/AFP/GettyImages)

China will enter the New Year under the shadow of looming economic and financial risk. Since the global financial crisis began in 2008, the Chinese economy has amassed a massive amount of corporate debt that, when seen to the same extent in other countries, has signaled treacherous times ahead. China is no stranger to ballooning debt, and it encountered similar problems at the turn of the century. Now Beijing is trying the same remedies it used before, but the circumstances it faces today are different than those it saw 15 years ago. Because China's economy is more controlled than most, Beijing has more room to influence it than Western countries have had in their own economies when faced with similar issues. But any action China takes will only put off its problems, instead of fixing them for good....

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