As Beijing scrambles to prop up a slowing economy and cooling real estate market, the government last week announced measures to make it easier for households and developers to borrow more money.
That may help in the short run. But the cure, say some observers, will do little to address the growing pile of bad loans that has left China’s financial system with deepening debt hangover.
“In the overall level of debt, they can still push it without creating immediate problems,” said Diana Choyleva, head of Macroeconomic Research at Lombard Street Research. “But if you look at the rate of increase in debt since the global financial crisis it’s extremely alarming.”
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