China’s debt, and bad loans are leading to questions about the state of China’s economy.Many foreign banks have loans outstanding in China, and the UK banks take the lead by far (see graph below).The question for China, and now the Uk and all banks with loans in China is what happens if China’s economy goes south?
The immediate effects would obviously be terrible for the UK banks and all banks with loans in China. But the real concern about the possible situation here would not only be the fact that China and the UK banks have gone down, but the global effects that may ensue. At this point the banks with China loans may be the least of the worlds worries.
This concerning trend leads to the question as to whether this will prompt any fiscal or monetary policy change by the Chinese government.