The financialization of the Chinese economy

CHINA ADVISORY - Report 12 Apr 2019 by Andrew Collier

The U.S. financial crisis was caused by the excessive “financialization” of the economy. Loans flowing to the residential property market were expanded into derivative products on Wall Street, sold to investors as securities, and funded primarily through short-term sources. The result was a maturity mismatch combined with systemic risk caused by linkages the regulators (and banks) had not acknowledged.

Could a similar crisis occur in China?

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