Party leaders have allowed a massive state and private sector borrowing binge that the IMF sees as a threat to China’s stability

There is a steel toboggan run offering rides down the side of the Great Wall of China that would fail the UK’s most basic health and safety tests. It could be a metaphor for the Chinese economy if, as many people believe, Communist party leaders allow a credit bubble to run out of control in a desperate attempt to maintain an electrifying 7% growth rate.

The Chinese are not alone when they turn a blind eye to excessive borrowing. Most nations depend on large and growing amounts of borrowing to fund everything from investment to the most basic services. In China’s case much of the debt is being used to offset the transition from a state that manufactures iron, steel and cheap electronics, textiles and consumer goods to one that embraces hi-tech industries attuned to environmental concerns. This creates millions of losers in traditional smoke-stack industries, lots of them in the north and west of the country.

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