China to guard against “black swan” and “grey rhinocerous”

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At the China Daily, the deleveraging message is heard amid thundering hooves:

Since the 18th National Congress of the Communist Party of China, the central government has attached great importance to the financial work, especially the prevention of financial risks, and adopted a series of measures to strengthen financial supervision, which has taken the development trend and the overall financial operation is stable. But also to see that under the influence of international and domestic economic downturn, China’s financial development is facing many risks and challenges. After the last round of expansion, the economic and trade imbalances, the internal imbalance of the financial industry, the loosening of the two, the structural problems are prominent; some of the main market behavior alienation, moral hazard increased significantly, And the financial regulatory system mechanism is not suited. In the context of the deepening development of economic globalization and the increased spillover of the international financial crisis, China’s economic cyclical, structural and institutional contradictions are superfluous and remind us to keep our minds awake and take precautions.

To prevent and resolve financial risks, need to enhance the sense of urgency. Financial is very important, but also prone to risk. The financial industry chain is long, the market information asymmetry, the value realization process twists and turns, and is susceptible to external factors, in the face of economic cycle fluctuations and rapid changes in social expectations and other uncertain conditions, the interests of the temptation, the behavior of participants changes quickly. Moreover, the financial field risk points wide, hidden, sudden, contagious, dangerous, must be extra careful, prudent management. Both against the “black swan”, but also against “gray rhinoceros”, all kinds of risk signs can not be taken lightly, can not turn a deaf ear.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.