IMF Gives China a Friendly Warning

Question: What is scarier than the fact that America is heavily in debt to China? Answer: America being heavily in debt to China, and China's banks looking increasingly more vulnerable. According to numerous reports on Tuesday, the International Monetary Fund (

) has issued a clear warning over the state of China's financial system. The

said that “The International Monetary Fund warned Tuesday that China's banks face growing risks that might hamper growth, adding to concern about the world's second-largest economy amid Europe's debt crisis.” This warning will do nothing to quell fears caused by analysts' claims that state-owned banks face a possible rise in bad loans. “Despite ongoing reform and financial strength, China confronts a steady buildup of financial sector vulnerabilities,” the IMF said in a report. "China's banks and financial sector are healthy, but there are vulnerabilities that should be addressed by the authorities," said Jonathan Fiechter of the IMF. While China is not on red alert just yet, it should be taking a good, hard look at Europe and America, and hoping that it is not a window into the future.