China's Debt Dynamics and Economic Stimulus

Richard Koo literally wrote the book on balance sheet recessions, or the idea that large levels of debt can weigh on future growth for years and even decades to come. Now, the Nomura Research Institute chief economist sees a similar risk emerging in China. The country has been struggling with vast levels of debt and slowing economic growth in the wake of the Covid-19 pandemic. In this episode, Koo discusses the signs he sees that a balance sheet recession is already underway as China's companies shy away from borrowing more money for future investment. He also suggests some ideas for just what China's authorities should do about it.

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