Two years ago, Zhou Xiaochuan, then China’s central bank governor, told a press conference at the 19th Communist party Congress in Beijing that too many procyclical factors in the economy and excessive optimism risked generating “accumulating contradictions that could lead to the so-called Minsky moment”.
There is still a danger of a “Minsky moment” hitting China’s economy. US academic economist Hyman Minsky, who died in 1996, warned of the risks of periods of financial excesses leading to crises. Today, China’s debt-to-gross domestic product ratio is more than 300 per cent and continues on a dangerously upward trajectory.
This op-ed was originally published on December 29, 2019 in the Financial Times. Read the full article here.