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I wonder if this is true about China…and does it matter?

Posted by Richard640 @ 23:36 on May 6, 2019  
  A ZH READER COMMENTS

Accordingly, the mythos of the ‘Chinese Model’ has emerged: so called ‘Capitalism with Chinese Characteristics.’ Yet no one can articulate exactly what ‘Capitalism with Chinese Characteristics’ means beyond platitudes about the ‘genius’ of China’s leaders and an even vaguer sense of ‘long term’ planning and ‘wisdom.’

In truth, the secret to China’s economic success is simple. It is built on the largest and fastest growing debt bubble in modern history. Today, the ratio of Chinese banking system assets to GDP (a measure of financial system debt) is higher than it was in the EU on the eve of the 2011 European Sovereign Debt Crisis and nearly six times that in the US before the 2008 Housing Crisis.

Looking specifically at corporate and household sector debt, China is reaching levels last seen in Spain before their financial crisis in 2011 or in Japan at the peak of their economic growth in the 1990s.

Considering that most of these figures exclude China’s massive $10 trillion shadow banking system, notoriously lax accounting rules, and penchant for completely making up economic statics to create the illusion of growth, China is likely in the midst of the largest debt bubble in modern history.

Much of China’s debt has gone into massive infrastructure projects throughout the country. Accordingly, China is now spending nearly 90% of GDP to build infrastructure despite persistent overcapacity problems and numerous ghost cities that still remain essentially empty years after they were built. Perhaps the most remarkable thing about China’s economy is that it is ‘only’ growing at an official rate of 6.7% despite such massive over construction and exaggerated economic numbers.

http://thesoundingline.com/taps-coogan-the-bloom-is-off-the-rose-in-china/

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Post by the Golden Rule. Oasis not responsible for content/accuracy of posts. DYODD.