Short primer on Chinese debt

Is provided by Bloomberg.

Here is one angle on its debt problem.

In 2008, China’s total debt was about 141 percent of its gross domestic product. By mid-2017 that number had risen to 256 percent. Countries that take on such a large amount of debt in such a short period typically face a hard landing. That’s why everyone—academics, private banks, the International Monetary Fund, the Organization of Economic Cooperation and Development, the Bank for International Settlements, and People’s Bank of China Governor Zhou Xiaochuan—is sounding the alarm.

The biggest problem of Chinese debt is that it is allocated by the party and not the markets. They could get away with this because of how lopsided their capital to labor ratio was, but that has largely leveled off and the CCP no longer has such a large margin of error when determining how debt is distributed.

This is the single biggest problem facing the Chinese economy in my opinion.

The rest can be found here.

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