Monitor | China may have problems, but this scare story isn't one of them
While alarmist talk of global meltdown sparked by a currency crisis at Chinese banks fires up doom merchants, the reality is more reassuring
As a headline, it was certainly eye-catching. "Currency crisis at Chinese banks could trigger global meltdown," declared a story in the Sunday edition of London's Daily Telegraph.
The article noted nervously that foreign currency borrowing by Chinese companies has almost quadrupled in just four years to more than US$1 trillion.
Any substantial appreciation of the US dollar - and many analysts are indeed expecting gains this year - could open up a dangerous cross-currency mismatch, forcing Chinese borrowers to default and inflicting shattering losses on international lenders, the story warned.
Prognostications of doom always sell well, and for a time over the weekend this particular scare was the most read story on the Telegraph's website. Even yesterday it ranked as the most viewed business article, attracting hundreds of comments from worried readers.
Fortunately the Telegraph's troubled readers can set their minds at rest.
The chance that China will suffer a currency crisis at any time in the foreseeable future is precisely zero. And even if the country were struck by crisis, there would be no danger of a global financial meltdown.