Systemic Risk (I): Shadow Banks and Local Debt

Chi Lo
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Chi Lo: Economic Strategist

Chapter 8 in China’s Impossible Trinity, 2015, pp 129-145 from Palgrave Macmillan

Abstract: Abstract As the Impossible Trinity descends upon China, exposing it to external shocks and policy choice dilemma, a major concern has emerged about systemic risks derailing its structural reform programme. The main worry focuses on China’s shadow-banking market, to which the official banking system is tied. Some observers even see Chinese banks as the world’s biggest systemic risk (Wall Street Journal 2014). There is also a worry about local government debt, which amounted to about one-third of China’s GDP in 2013. Owing to its rapid rate of growth, at an estimated 67 per cent a year between 2010 and 2013, some analysts worry that local government debt has grown so fast as to become a major national burden and an international concern (Economist 2014).

Keywords: Local Government; Moral Hazard; Systemic Risk; Structural Reform; Fiscal Revenue (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-53879-6_8

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DOI: 10.1057/9781137538796_8

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