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Friday, January 13, 2017
Reforming government key to solve leverage efficiency issue
ANBOUND

Li Weisen, a professor at the School of Economics at Fudan University, recently said that all industries in China now are facing the issue of over-capacity. The negative effects of the previous round of large-scale economic growth stimulus have yet to be resolved, and now there is large-scale additional infrastructure investment. Should China deleverage, or increasing leverage? Anbound's chief researcher Chan Kung believes that leverage should be increased in the infrastructure sector. Yet, if the leverage is not increased, it would be hard to realize the goal for stable growth. If the economic growth rate is declining in a fast rate, the final result would be substantial deprivation of wealth of the people. Slight increase of leverage in infrastructure can be seen as long-term assets. The focus of the issue is however the Chinese government. There is the need to reform the government through supply-side reform.

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