(Bloomberg) -- Newly named People's Bank of China Governor Yi Gang has his work cut out for him.
A yawning gap between growth in money supply and real economic activity during Zhou Xiaochuan's 15-year tenure has fueled a pile of debt risks that Yi must now grapple with. China's authorities have dubbed the hazards "gray rhinos" -- highly probable, high-impact threats that people should see coming, but often don't. These include risks such as shadow banking, property bubbles, high leverage in state-owned enterprises and local government debts.
The following chart shows the root of the problem:
"The main job now is deleveraging and unwinding gray rhinos to deal with the problems left from the past 15 years," Andy Xie an independent analyst and a former chief Asia economist at Morgan Stanley, told Bloomberg TV. "I think Yi Gang will have a very difficult job: how to reduce leverage without disrupting the economy."
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--With assistance from Haidi Lun
To contact the reporter on this story: Malcolm Scott in Hong Kong at mscott23@bloomberg.net.
To contact the editors responsible for this story: Jeffrey Black at jblack25@bloomberg.net, Malcolm Scott at mscott23@bloomberg.net, James Mayger
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