US and European stock markets rose on Wednesday.
The S&P 500 rose 1.1 percent while the STOXX Europe 600 rose 0.8 percent.
However, in Asia, both the Nikkei 225 and the Shanghai Composite slipped 0.1 percent.
“Concerns around China are subsiding a little bit, but that doesn’t mean we’re there yet,” said Lukas Daalder, chief investment officer at Robeco Investment Solutions.
A heavy debt burden is one of the concerns for China, and analysts are divided over how serious it is. From Bloomberg:
By some accounts, borrowing is out of control and has the country teetering on the edge of a crisis. Others point to the nation's long list of assets, which can more than offset any funding crunch...
Analysis by Jonathan Anderson published in Gavekal's China Economic Quarterly said it all in the headline: "China's Impending Minsky Moment." Mizuho Securities Asia Ltd. economists led by Shen Jianguang argue that sky-high savings rates, potential to develop its capital markets, low levels of foreign debt and record of solving past crises mean the nation can avoid a Minsky moment.
However, even Mizuho acknowledged the need for the Chinese government to take action.
But to escape a crunch, the government needs to push through painful structural reforms, improve financial market regulation and get a grip on contagion risk, according to Mizuho.
The specifics of government action obviously matter. Christopher Balding for one has not been too impressed with the Chinese government's measures so far, saying that there is "a serious risk of making its debt problems worse".
Meanwhile, Bloomberg reports that there is also a debt problem in nearby Southeast Asia.
Governments and companies in Indonesia, Malaysia and other countries in the region have continued to add to borrowing this year after selling the most amount of dollar bonds in three years in 2015, increasing risks if the U.S. Federal Reserve again lifts interest rates, the dollar rallies and local currencies tank.