There’s no shortage of concerns surrounding the health of the Chinese economy, particularly when it comes to debt.
However, while no one is exactly sure how the the nation’s credit-fuelled rise to economic prominence will play out, Raymond Yeung and Betty Wang, China economists at ANZ, that the near-term risks are pretty manageable at present.
The pair have created this interesting infographic on possible black swan events that could derail the economy in the latter parts of the Lunar year.
The phrase “black swan”, coined by Nassim Taleb, describes unforeseen but enormously disruptive events in financial markets. Many refer to unlikely-but-possible risks as “grey swan” events.
Here is is.
Of all the potential grey swan events Yeung and Wang put forward, they deem a trade war between China and the US as the greatest risk, assigning two black swans out of a possible three.
“While the risks of Sino-US trade tension are still looming, the outlook for China’s exports for the rest of this year remains solid,” they say.
Elsewhere risks associated with the Chinese currency, property market and financial system are deemed to be fairly low, with a the prospect of deflation — never a good thing when it comes to debt servicing — seen as negligible.
Of course, these are only possible black swan events. By there very nature, that could come from anywhere.