Columbia International Affairs Online: Working Papers

CIAO DATE: 11/2014

China's Debt Dilemma: Deleveraging While Generating Growth

Yukon Huang, Canyon Bosler

September 2014

Carnegie Endowment for International Peace


Much of the media coverage of China’s economy suggests that the country is headed for a financial crisis. China’s mountain of debt is decried, local government finances are labeled menacing, and a property bubble is called disastrous. But this picture is misleading. While China has serious debt problems, with prudent macroeconomic policies and productivity-enhancing structural reforms, the challenges should be manageable if underlying fiscal issues and growth-related reforms are addressed.