China has rapidly risen to become the world’s second-largest economy, but it risks toppling without reforms, according to Kai Li, W. Maurice Young Chair in finance at the UBC Sauder School of Business.
With the introduction of its stock market 30 years ago, Chinese investors were given the opportunity to own a piece of this surging GDP. However, insider trading, corruption and price manipulation are rife, and corporations can’t rely on it for long-term R&D investment, says Li. Banks are propping up corporations, but without proper risk management they are racking up immense unrecoverable debt, she says.
This, warns Li, has created a ticking time bomb that could wreak havoc on global markets if it eventually explodes.
To read the full story, click here.
