The sharp increase in non-financial corporate leverage in China is particularly noteworthy, but it does not necessarily imply that the Chinese economy is on the cusp of implosion. However, we are becoming increasingly concerned that the Chinese economy may be headed for a prolonged period of disappointing economic growth if authorities misallocate capital via continued lending to the inefficient state-owned enterprise (SOE) sector. Leverage certainly has risen in most other Asian economies, but debt generally appears to be widely dispersed in most of these economies.
View commentary: developing-country-leverage-20160421
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