For every optimist on China, we are now starting to see pessimists. Kenneth Rogoff, the former International Monetary Fund chief economist who co-authored This Time is Different—a chronicle of 800 years of financial crises—joined the latter this month. He warned that a property collapse would hit the banking system.
Chinese markets ignored him then, but we wonder if they’re coming around to his way of thinking. The Agricultural Bank of China, whose initial public offering at $22.1 billion is the world’s largest, opened to a tepid response on Thursday.
China now finds itself slowing, the latest figures show. After its credit binge last year found its way into housing, Beijing has been forced to slam the brakes— yet it’s likely to go back to pressing the accelerator soon. But as Rogoff’s research proves, too much credit isn’t too good.
And you don’t really want to argue with a man who’s done 800 years of homework, do you?