China Needs Mass Privatization To Avoid Crisis

China is in the midst of a property bubble fueled by a shadow banking system and local political corruption. The meeting of crises will, according to some of the biggest investors out there, result in a financial crisis at some time in the future. A new analysis from ANZ Research disputes that conclusion, arguing that large scale privatization, among other changes, will save the country.

The ANZ Research note, which was authored by Li-Gang Liu, Hao Zhou, and Louis Lam, argues that debt levels at China’s local government institutions have been overblown,...