Sunday, May 08, 2016

The Coming Debt Bust In China
"It is a question of when, not if, real trouble will hit in China .. China requires more and more credit to generate less and less growth: it now takes nearly four yuan of new borrowing to generate one yuan of additional GDP, up from just over one yuan of credit before the financial crisis. With the government’s connivance, debt levels can probably keep climbing for a while, perhaps even for a few more years. But not for ever .. When the debt cycle turns, both asset prices and the real economy will be in for a shock. That won’t be fun for anyon .. One thing is certain. The longer China delays a reckoning with its problems, the more severe the eventual consequences will be .. China must start to curb the relentless rise of debt."
- The Economist 
LINK HERE to the article

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