That’s the speculation in a recent posting by Bob Davis of the Wall Street Journal:
One of the most striking facts unearthed by the International Monetary Fund in its recent review of China’s economy was how much of a risk Beijing was taking by not aggressively deflating its credit bubble.
IMF economists looked at 43 countries over 50 years and found that just four had seen credit grow as rapidly as China had in the past five years – and all four faced banking crises within three years of such supercharged growth.
The Chinese response? “Ain’t gonna happen.” We’ll see. The full post is here.