Investors are increasingly worried about the risk of defaults in China as the country’s debt pile accumulates while the economy slows, but analysts say Beijing can manage for now.
“The risks are manageable. Much of what goes on in China is controlled by the government. And the government has plenty of firepower to ensure growth holds up,” said AMP Capital’s head of investment strategy and chief economist Shane Oliver in a note published on Tuesday.
The risk of debt defaults in China overtook the threat of deflation in the euro zone as the second biggest “tail risk” among investors, according to a Bank of America Merrill Lynch global investor survey published on Wednesday.