Has China’s short run of small and medium sized SME private companies come to an end? Greed has pushed private companies to over-leverage themselves, but the catalyst to this movement is the Chinese government’s tightening of credit.
China Reins in Credit
China has built huge new infrastructure, mainly financed by state and city government borrowing. This is, in part, to goose growth, jobs and therefore social harmony at any cost. This borrowing has steadily increased as the Chinese economy has slowed down. China wants to rein in and reduce this borrowing.
