Ambrose Evans-Pritchard, for the Telegraph:
The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.
“The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation,” said Charlene Chu, the agency’s senior director in Beijing.
“There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling,”
Whoops! You mean there’s a giant hole in Chinese bank balance sheets? That they’re just as healthy as their western counterparts? Sounds very problematic indeed.
Luckily, China has massive amounts of foreign reserves. Oh, wait!