China’s Bubble

Shadow banking boom pushes China to edge of debt sustainability

08 June, 2015

(Yes, this is from a couple of months ago, but it is enlightening.)

… total leverage in the Chinese economy now topping 280 per cent of gross domestic product …

Analysis by the McKinsey Global Institute earlier this year showed debt in the Chinese economy had roughly quadrupled between 2007 and the middle of last year to US$28 trillion, leaving it with a debt-to-GDP ratio more than twice that of crisis-wracked Greece.

Hu said the potential systemic risks caused by the boom in shadow banking could not be ignored, even though its emergence in China as a crucial funding source in the wake of the global financial crisis in 2008 had helped underpin economic growth. …

Global investors and international credit ratings agencies broadly worry that huge credit bubble risks are building inside the Chinese economy that could explode with devastating domestic consequences and potentially spill over into the global economy.

(and then he wrote the following in which he said that China’s profit margins are so thin that it can’t devalue the juan and turn a profit:)

China, the Hollow Dragon


About icliks

Biding my time in central ms ... yours too, if ur reading this.
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