According to a Walls Street Journal report,when top officials at the U.S. Federal Reserve want to understand the Chinese financial system, they meet Charlene Chu. Goldman Sachs, which isn't short of China experts, interviewed her and sent the transcript to its clients.
"China is the classic story of corporate credit excess, but to an extreme," says Ms. Chu. By Fitch's measure, higher than the government's, China's private-sector debts rose from 129% of the size of the economy in 2008 to 214% at the end of June.
Ms. Chu shined the spotlight on China's shadow banking system, exposing vast amounts of unreported debt. She is credited by fellow China experts with spurring the country's central bank in 2011 to expand its measure of debt in the economy to include lending done through shadow banks—though Ms. Chu says that, even now, not all such debt is included in official figures.
"China is the classic story of corporate credit excess, but to an extreme," says Ms. Chu. By Fitch's measure, higher than the government's, China's private-sector debts rose from 129% of the size of the economy in 2008 to 214% at the end of June.
Ms. Chu shined the spotlight on China's shadow banking system, exposing vast amounts of unreported debt. She is credited by fellow China experts with spurring the country's central bank in 2011 to expand its measure of debt in the economy to include lending done through shadow banks—though Ms. Chu says that, even now, not all such debt is included in official figures.
"We are big fans of her work," says James Chanos, one of the loudest negative voices on China. His hedge-fund firm, Kynikos Associates, started placing bets against China in 2009, when Ms. Chu was warning China's debt-led stimulus program, designed to counter the global economic crisis, could build into a debt bubble.
Goldman Sachs sent a research report to clients this month titled "China Credit Concerns." It featured a Q&A with Ms. Chu, on top of a list of articles by seven of Goldman's China experts. Goldman wouldn't comment.
