China already in danger zone for financial crisis – Bloomberg Economics

In a note published on Tuesday, Bloomberg Economics economists Fielding Chen and Tom Orlik warned over the chances of a financial crisis in China, in the wake of a potential surge in the country’s debt over the next five years.

Key Quotes:

China’s total debt will reach 327% of the gross domestic product by 2022, double the level in 2008. That will put China among the most indebted countries in the world.

"The rapid growth and high level of China’s debt have already placed them in the danger zone for a financial crisis."

"Adding debt equivalent to almost 70 percent of GDP in the next five years wouldn’t mean a crisis is inevitable, but it would severely reduce the chances of avoiding one."