China’s government has the resources to clean up the bad debts in its financial system. Even if the corporate sector were to default on a quarter of its debt and the government responded by bailing out the banks, total government debt would remain below 100% of GDP, which is high but manageable. The major stumbling blocks to implementing a successful bailout are political rather than financial.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services