DHARAMSALA, June 28: The National Institute for Finance and Development(NIFD), one of the top national-level Think Tanks in China, has stated that the country may be heading towards a potential ‘financial panic’, according to media reports.
“Chinese government-backed think tank has warned of a potential “financial panic” in the world’s second-largest economy, a sign that some members of the nation’s policy elite are growing concerned as market turbulence and trade tensions increase,” Bloomberg said citing a leaked report by the NIFD.
“We think China is currently very likely to see a financial panic,” the leaked report stated.
NIFD, the Chinese government-backed think tank further said in its report that liquidity shortages and the recent plunge in financial markets pose particular dangers at a time of rising U.S. interest rates and a trade spat with Washington.
It further warned that leveraged purchases of shares have reached levels last seen in 2015 — when a market crash erased $5 trillion of value.
NIFD’s report is said to have appeared briefly on the Internet on Monday before it has been removed.
So amidst the escalating trade war with the US, China may as well be heading towards an economic slump and the Chinese think tanks seems to confirm the downfall.
“We failed to clean up the leveraged funds after the 2015 market rout; they have staged a comeback in a new guise,” NIFD said, reports the Bloomberg.