Can China stem its rapid credit growth?

ON CHINA

China's economy has seen headwinds recently, including weak exports, slower growth and a feeble recovery of corporate earnings despite rapid credit growth.

China’s equity markets have performed weakly too and have been extremely volatile. But much of the recent volatility has less to do with sagging growth and more to do with a cash crunch and tight liquidity in China’s banking system. What is going on? These developments are taking place amid major reform efforts in China’s capital markets. With stronger demand for wealth management, savings and trust products in China, the actions of central government authorities should be seen not merely as a response to an uptick in credit growth but as steps toward reshaping its entire financial syste...