A special adviser to the European Commission (EC) is expressing concern about China’s plan to undertake quantitative easing (QE), the Hong Kong Economic Journal reported Monday.
Alicia García-Herrero, who advises the EC on China issues, said the country should cut debt instead of expanding its balance sheet.
Garcia-Herrero said China’s combined liabilities exceed the average debt of other emerging markets or those owed by national companies.
She said China’s fiscal deficit was more than 8 percent of gross domestic product last year, comparable to those of debt-laden countries in southern Europe.
This has pushed up China’s financing costs which cannot be fixed simply by plowing more money into the market with QE, she said.
Translation by Vey Wong
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