Comité Latino Americano de Asuntos Financieros

Third, the shortfall in Chinese economic growth derives from the exhaustion of strong investment in low productivity sectors, which was part of the Chinese response to the global financial crisis. The Committee placed great emphasis on the large credit expansion, which was channeled mostly through institutions outside the traditional financial system (known as shadow banking). Given this factor, risks coming from China may simply exceed those associated with an economic slowdown, to the extent that such development occurs together with a financial crisis.