Much of the discussion about the slowdown in China’s economy has focused on the growing trade dispute between China and the United States. But not enough attention has been paid to deliberate decision by the Chinese government to cut back on its debt, according to Jin Keyu, an economics professor at the London School of Economics.
Speaking at a panel entitled The Debt Time Bomb, Jin said that the Chinese government has been taking deliberate steps to reign in debt for the last two years.
“Only two years ago financial markets were saying that China is the next ticking financial bomb. Financial fragility was the issue in China because of debt,” she said. “We are seeing the consequences of a deleveraging cycle to make China safer, although slower.”
China announced this week that its economy grew only 6.6% in 2018, its slowest annual pace of growth since 1990.