China: Banking crisis looms

Government debt soars to ‘European’ levels following massive stimulus programme

As the global economy lurches towards renewed recession and financial turmoil, concerns are growing over the state of China’s largely state-owned banking system. For more than two years an unprecedented surge of bank credit has powered the biggest construction boom in history, sucking in raw materials from around the globe and ‘supersizing’ GDP (gross domestic product) growth rates for commodity exporters. But the chickens are now coming home to roost as Beijing’s mega-stimulus also sent debt levels soaring.

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