In a Focus last month, we discussed what we see as the most plausible hard landing scenario for China: troubles at a small bank that spread to the interbank market and trigger a systemic banking crisis. There are disconcerting similarities in the strains that have followed the regulatory takeover of Baoshang Bank. These have intensified in the past week, taking credit spreads for low-rated banks to record levels. This may not be the Big One but recent events underline that a banking crisis is a significant medium-term risk. Meanwhile, China conceded defeat this week in a key case at the WTO. It will be hoping for a better outcome from talks between Presidents Xi and Trump at the upcoming G20.
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