Deutsche Bank warning: Global financial CRASH inevitable if Chinese ‘credit bubble bursts’

Tuesday, September 19, 2017
By Paul Martin

DEUTSCHE Bank analysts have warned China could be at the centre of the next financial crisis.

By JON ROGERS
Express.co.uk
Tue, Sep 19, 2017

Strategists at the German bank have indicated China could be the trigger for the next economic downturn as the country’s “fundamental vulnerabilities” remain.

Research by the bank’s strategists Jim Reid, Nick Burns, Sukanto Chanda and Craig Nicol found China still needs to reposition its economy “from manufacturing to services and investment to consumption.”

But in a report, Deutsche Bank also warned this move needed “to take place in the context of also containing the rapid growth of credit in our view.”

The report said: “Rapid credit expansion due to an insatiable demand for debt fuelled growth, compounded by a hugely active shadow banking system, as well as an ever expanding property bubble fuelled fears for economists that China could inevitably make a hard landing and send shockwaves through the world’s financial markets. However, the economy has seemingly defied the odds.”

“However, future growth cannot forever rely on debt and investment alone…The warning signs are there and the fundamental vulnerabilities remain. The greater issue might be ‘when’ rather than ‘if’ the credit bubble pops.”

The strategists examined the possible areas that could trigger the next financial crisis, saying they were highlighting possible areas of concern.

It comes after the European Union Chamber of Commerce said China needed to carry out promises to open its economy and warned inaction might fuel a backlash against free trade.

The Chamber said Beijing was backtracking in some areas including by imposing new restrictions on food imports, express delivery and legal services. It proposed hundreds of possible changes to open the state-dominated economy wider or simplify rules in fields from cosmetics to medical devices.

The Rest…HERE

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