Can China avoid a financial crisis? That’s the question facing regulators and investors after a rapid rise in leverage in the world’s second-largest economy. The links between the official banking system and shadowy institutions have also grown deeper and harder for regulators to fathom. Breakingviews explains how the People’s Republic might avert a meltdown, but might find a credit crunch harder to dodge The amount of debt in the Chinese system has exploded. Total non-financial credit has surged to around two and half times annual output by the first quarter of 2016, according to the Bank for International Settlements.

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