Yi Gang's `Very Difficult Job'

(Bloomberg) -- Newly named People’s Bank of China Governor Yi Gang has his work cut out for him.

A yawning gap between growth in money supply and real economic activity during Zhou Xiaochuan’s 15-year tenure has fueled a pile of debt risks that Yi must now grapple with. China’s authorities have dubbed the hazards "gray rhinos" -- highly probable, high-impact threats that people should see coming, but often don’t. These include risks such as shadow banking, property bubbles, high leverage in state-owned enterprises and local government debts.

The following chart shows the root of the problem:

"The main job now is deleveraging and unwinding gray rhinos to deal with the problems left from the past 15 years," Andy Xie an independent analyst and a former chief Asia economist at Morgan Stanley, told Bloomberg TV. "I think Yi Gang will have a very difficult job: how to reduce leverage without disrupting the economy."

CLICK HERE to read the detailed story of Yi Gang’s appointment

©2018 Bloomberg L.P.