Leaked note from Chinese think tank warns of potential 'financial panic': report

A report leaked from a Chinese government-backed think tank warns of a potential “financial panic” in the country,  suggesting that some of the top policy-makers are concerned at rising market turbulence and trade tensions, Bloomberg reportd.

According to the report, citing a study by  China's National Institution for Finance & Development (NIFD),  bond defaults, liquidity shortages and the recent plunge in financial markets pose particular dangers at a time of rising US interest rates and a trade dispute with Washington.
The think tank warned that leveraged purchases of shares have reached levels last seen in 2015 -- when a market crash erased $5 trillion of value.
"We think China is currently very likely to see a financial panic,” NIFD said in the study, which appeared briefly on the Internet on Monday, before being removed. “Preventing its occurrence and spread should be the top priority for our financial and macroeconomic regulators over the next few years.”
According to Bloomberg, the study is another indicator that China is growing concerned about the effects of trade tensions with the US In recent weeks. 
It said prominent academics have begun to question if China’s slowing, trade-dependent economy can withstand a sustained dispute, which has already started to weigh on stock prices and the yuan.
According to NIFD, authorities should also be willing to step in with full financial support if a major default roils markets, rather than taking piecemeal steps.
NIFD said China had failed to address the issue of leveraged stock purchases, a major contributor to the market collapse three years ago. Such wagers have reached about 5 trillion yuan ($760 billion), a similar level to 2015, it said.
"We failed to clean up the leveraged funds after the 2015 market rout; they have staged a comeback in a new guise," NIFD said.
The think tank said China’s State Council should be ready to implement any market support measures in coordination with the central bank and other regulators, key government ministries, and the police.