China's resurgence might rest on shaky investment foundation

01/3/2013 | Bloomberg

China's economic rebound is being driven by investment, but a stronger consumption component is needed to avoid the risks posed in a pumped-up investment environment, analysts say. "The U.S. got into trouble because institutions like Fannie Mae and Freddie Mac were too big to fail and had a toxic mix of private shareholders and implicit government guarantees. China's financial system is full of Freddies and Fannies," said David Loevinger, former senior coordinator for China affairs at the U.S. Treasury Department.

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