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Abstract

The Chinese economy, one of the leading economies of the world, had established its supreme commercial presence over the years. Despite achieving a stable economic growth in yester years, the Chinese economy had experienced a downfall in its steady progress during 2015-16. Various factors, namely, an abnormal increase in credit growth, overvalued currency crisis, a frothy real estate market, etc had specifically hit the national economy of China. Besides that, the Bank for International Settlements (BIS) had predicted that the Chinese banking sector might experience a commercial crisis in 2017-19 if it failed to control the rising debt volume. Moreover, the BIS had stated that the credit-to-GDP gap of China had recorded around 30.1 in the first quarter of 2016. It had further explained that any level that surpassed the 10 mark would consider a probable financial crisis that 'occurs in any of the three years ahead'. However, Deutsche bank had rejected such probability that the Chinese banking sector would face the danger of a financial crisis during 2017-19. Also, after analysing roughly 765 banks in China, UBS had declared that an appropriate counteractive strategy was introduced in the country's banking sector, particularly through the beginning of bailouts to the Chinese banks. Furthermore, the short-run business solution, which were available to the Chinese strategists, might become helpful to counteract the 'hard economic landing' of China in the days to come. In this backdrop, would the Chinese banking sector be able to avoid the probable commercial crisis in future?
Location:
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Other setting(s):
2016

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Abstract

The Chinese economy, one of the leading economies of the world, had established its supreme commercial presence over the years. Despite achieving a stable economic growth in yester years, the Chinese economy had experienced a downfall in its steady progress during 2015-16. Various factors, namely, an abnormal increase in credit growth, overvalued currency crisis, a frothy real estate market, etc had specifically hit the national economy of China. Besides that, the Bank for International Settlements (BIS) had predicted that the Chinese banking sector might experience a commercial crisis in 2017-19 if it failed to control the rising debt volume. Moreover, the BIS had stated that the credit-to-GDP gap of China had recorded around 30.1 in the first quarter of 2016. It had further explained that any level that surpassed the 10 mark would consider a probable financial crisis that 'occurs in any of the three years ahead'. However, Deutsche bank had rejected such probability that the Chinese banking sector would face the danger of a financial crisis during 2017-19. Also, after analysing roughly 765 banks in China, UBS had declared that an appropriate counteractive strategy was introduced in the country's banking sector, particularly through the beginning of bailouts to the Chinese banks. Furthermore, the short-run business solution, which were available to the Chinese strategists, might become helpful to counteract the 'hard economic landing' of China in the days to come. In this backdrop, would the Chinese banking sector be able to avoid the probable commercial crisis in future?

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Location:
Industry:
Other setting(s):
2016

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