China must wean itself off debt addiction if it is to avoid financial calamity, warns IMF chief

[WestVirginiaRebel]

UK Telegraph:

China is edging towards "financial calamity" and must wean itself off its debt addiction and reform if it is to avoid a crisis, the International Monetary Fund has warned.

 

Markus Rodlauer, deputy director of the IMF's Asia-Pacific department, said the world's second largest economy was approaching a tipping point where its rapidly growing financial sector and surge in shadow credit could undermine the state's ability to contain the fallout from a crash.

 

"The level of financial and corporate debt and the complexity of the financial system and rapid growth in shadow banking is on an unsustainable path," he said.

 

"While still manageable in its size given the size of the public assets under public control, the trend is dangerous and if it's not corrected it will lead to a correction.

 

"The longer it lasts ... the more serious the disturbance and the disruption might be. [The reaction could range] from a mild growth slowdown, to a sharp slowdown in growth to potentially a financial crisis."

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China literally in the red.