Don’t Rule Out a Financial Crisis in China

The world’s second largest economy has a deflating property bubble, local governments struggling to pay their debts and a banking system heavily exposed to both.

Anywhere else these factors would be seen as precursors of a financial crisis. But not in China, conventional wisdom goes, because its debts are owed to domestic rather than foreign investors, the government already stands behind much of the financial system and capable technocrats are on top of things.