Hong Kong/Tokyo — It used to be that when America sneezed, the world caught a cold. This time around, it’s the risk of a sickly China that poses a bigger threat. The world’s second-largest economy is now trying to ward off the sniffles. While output is still growing at a pace that sees GDP double every decade, the problem remains that much of that has been fuelled by a massive build-up of credit. Total borrowing climbed to about 260% of the economy’s size by the end of 2016, up from 162% in 2008, and will hit close to 320% by 2021, according to Bloomberg Intelligence estimates. Economy-wide debt levels are on track to rank among "the highest in the world", according to Tom Orlik, Bloomberg Intelligence’s chief Asia economist. That path may be what prompted outgoing People’s Bank of China governor Zhou Xiaochuan to warn of the risk of a plunge in asset values following a debt binge, or a "Minsky Moment", earlier this month. Given that China is forecast by the International Monetary F...

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