The country of China in recent times has been facing an economic slowdown. Ken Rogoff, the former chief economist of the International Monetary Fund has warned that the slowdown in China could prove to be a big threat to the global economy.
Rogoff added that the slowdown of one of the main engines of global growth could not be determined. The former chief economist said, “China is going through a big political revolution”. Rogoff has also warned that the economy of the country is slowing down much more than the official figures show.
The economist commented, “If you want to look at a part of the world that has a debt problem look at China. They’ve seen credit fuelled growth and these things don’t go on forever.” Recently the Bank of International Settlements, which is the global think tank for central banks said that China’s credit to GDP stood at 30.1%. The GDP analyses the amount of debt in an economy relative to annual growth.
The figure has increased fears that the economic betterment of China was based on an unstable credit bubble. The Financial Policy Committee of the Bank of England said that the figure was very high by international standards. The committee tests British banks’ exposure to a Chinese slowdown.
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