China's Economic Imbalances and the Role of the Financial Sector

10 Pages Posted: 6 Oct 2017

See all articles by Jacopo Timini

Jacopo Timini

Universidad Carlos III de Madrid; Banco de España; Centre for European Policy Studies (CEPS)

Date Written: October 5, 2017


China’s economic success in recent decades has been associated with a distinctive, highly investment dependent, pattern of growth, which has led to a high level of non-financial private sector debt. The Chinese authorities, recognising that this model has reached its limits, have made “rebalancing” the pattern of growth one of their key economic policy objectives. One feature of this rebalancing is that of promoting an orderly deleveraging process to avoid a sharp adjustment of the economy. In this context, this article discusses the challenges being faced by the Chinese authorities as they seek to reduce non-financial sector debt levels and mitigate the risks associated with the excessive growth of the financial system, and of the shadow banking sector in particular.

Suggested Citation

Timini, Jacopo, China's Economic Imbalances and the Role of the Financial Sector (October 5, 2017). Banco de Espana Article 22/17. Available at SSRN:

Jacopo Timini (Contact Author)

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, 28903

Banco de España

Alcala 50
Madrid 28014

Centre for European Policy Studies (CEPS) ( email )

1 Place du Congres, 1000
Brussels, 1000

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