Julian Evans-Pritchard, China economist at London-based Capital Economics, believes that the country’s dependence on stimulus spending and burgeoning debt levels make it “the most obvious candidate” for an economic crisis.
Speaking to ABC News Evans-Pritchard said that the Chinese economy remains dependent upon upon fiscal stimulus to prop up flagging economic growth.
“The challenge is that improvement has been reliant on significant stimulus which is now being withdraw, which creates concerns about the outlook going forward.”
According to Evans-Pritchard stimulus dependence has resulted in a burgeoning bad debt load that has significantly heightened the vulnerability of the Chinese economy.
“If China was a free market economy, it already would have had a financial crisis, given the build-up in the level of non-performing debt in the banking system…that’s why the game keeps going [and] the debt keeps building.”
Consequently Evans-Pritchard contends that “the most obvious candidate for another global crisis at this stage is China itself.”