China Decides Debt Can Be Dangerous

The Chinese Communist Party is now officially worried about mounting debt. “A tree cannot grow up to the sky—high leverage will definitely lead to high risks,” said a front-page commentary in the People’s Daily on May 9. The author of the commentary was identified as “an authoritative person,” usually code for the top leadership. “Any mishandling will lead to systemic financial risks, negative economic growth, or even have households’ savings evaporate. That’s deadly.”