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China's Path to Economic Recovery Post-Coronavirus with Michael Pettis

Interpreting India

00:00

The COVID-19 Problem in China

Banks have real trouble lending to the private sector, because most lending in China is lending against assets. SME's small and medium enterprises aren't borrowing money but are using it to pay down more expensive shadow banking debt. Many of the smaller companies that were given COVID-19 loans didn't use the money to keep their factories open. They used the money to buy apartments in Shenzhen, a city with the fastest increase in apartment prices. That just turns real lending into speculative purchases,. But it's very hard to resolve that. There really isn't demand.

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