China Should Curb Financial Risk to Protect Economy

China could possibly reduce its efforts to control risks within the financial sector to secure the economy, according to Autonomous Analyst Charlene Chu. The economic growth of China continued to be supported by increasing debt amid the repression in shadow banking and within the other areas of financial domain. The speech delivered by the government covers up its softly-softly approach during the financial risk discussion despite concerns that stronger action would cause danger towards the economy or Chinese banks balance sheets, Chu added. She further mentioned that previously these problems have given less attention and action.

Moreover, Chu is known to be invariably bearish due to threats from massive credit with an estimate of 226 trillion yuan ($36 trillion) last year. But in the present, the problems were properly acknowledged which is called as  ‘Chinese medicine’ prescription that outlines gradual stabilization while removing the high risk of behavior. An assertive method would focus further on the underlying fundamental issues but could lead to disturbance in the short term. Whilst, a softer approach would push China to become susceptible to systemic risk for the years to come. The perspective of Chu opposed the views of other investors and analysts who believe that regulators would be able to have a good performance when curbing high debt.