China can deflate the world's largest credit bubble in an orderly fashion

Thomson Reuters China's authorities are committed to orchestrating an orderly unwind of US$3 trillion worth of excess credit and the resultant distressed debt on banks' balance sheets by employing a multi-pronged, market-based approach. In our view, there are essentially three alternative paths for resolution. Firstly, let's consider a government bailout. Today's situation is very different from the period 2002 to 2004 when Beijing launched an earlier government bailout of the state-owned bankin...