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Credit Booms—Is China Different?
Author:
Ms. Sally Chen
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and
Mr. Joong S Kang
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Series:
IMF Working Papers
Volume/Issue:
Volume 2018: Issue 002
Language:
English
Publication Date:
05 Jan 2018
DOI:
https://doi.org/10.5089/9781484336762.001
ISBN:
9781484336762
ISSN:
1018-5941
Pages:
22
Keywords:
WP; GDP; credit boom; monetary policy; credit gap; debt overhang; sustainable growth; financial cycles; banking crises; credit growth; credit efficiency; shadow credit product; debt threshold; credit bust; credit Boomwtthout; sector credit; credit adjustment; credit intensity; LGFV debt; asset ratio; credit series; Credit; Credit booms; Financial statements; Bank credit; Global
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Strong Chinese output growth after the Global Financial Crisis was supported by booming credit. This credit boom carries risks. International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown. Several China-specific factors—high savings, current account surplus, small external debt, and various policy buffers—can help mitigate near-term risks of a disruptive adjustment and buy time to address risks. But, if the risks are left unaddressed, these mitigating factors will likely not eliminate the eventual adjustment, but make the boom larger and last longer. Hence, decisive policy action is needed to deflate the credit boom safely.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund