The problem is that China does not really have a liquidity crisis; it has a debt crisis, and the debt crisis is the result of a slowdown in the economy. Despite claims from China’s National Bureau of Statistics that the economy is growing 7.7 percent, growth is more like 3 to 4 percent. And if you strip out economically useless production, the growth rate might even be 0 percent. Slow growth means borrowers will not be able to service their debts, and highly leveraged businesses and government entities will default in domino-like fashion.

Read Here – World Affairs Journal