Could China’s banks handle a large stimulus package?

CHINA ADVISORY - Report 27 Mar 2020 by Andrew Collier

The current debate is about how China can engineer a V-shaped recovery when (and if) the virus abates. What shape will a stimulus take and what will the impact be on China’s long-term economic trajectory? I have argued that the state has been disciplined about avoiding a large-scale stimulus measure – apart from one area: infrastructure spending through the bond market. Now it looks like there is likely to be an increase in infrastructure spending, probably funded mainly by the banks.

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