I write a lot about China because our future is inextricably tied to the policy decisions of its government and the investment decisions of its citizens. Kenneth Rogoff is an economics professor at Harvard and had previously been the chief economist and research director at the International Monetary Fund from 2001-2003; he stated that he could see China exporting a recession to every other country with its soaring debt. Put simply, “China has fueled its explosive growth via a massive credit buildup.”
Apparently, China's outstanding non-financial sector debt hit 191.3 trillion yuan (US$27.96 trillion), or 251% of gross domestic product (GDP) in the first quarter of 2017 up from 158.3 trillion yuan, or 231% of GDP at the end of 2015.
Even more telling is China’s total debt—the sum of government, corporate and household borrowings—has soared since 2008, and is now almost 300 percent of the country’ gross domestic product GDP. This is far higher than any other emerging market and higher than stablished economies. Total debt in Japan, the poster child for indebtedness, is 229 percent of GDP, the United States 104.17 percent.
The numbers speak for themselves. While total Chinese debt amounted less than RMB20 trillion in 2002, it passed the RMB160 trillion mark in 2016. By 2009, private household debt was around RMB6 trillion; in 2016 it reached RMB20 trillion. In the same seven years, private corporate debt climbed from RMB9 trillion to RMB30 trillion and government debt went from RMB15 trillion to RMB40 trillion.
Many pundits are citing all sorts of statistics to warn of the probable bursting of the Chinese debt bubble. Of course, we live in our own bubble here in Vancouver with seemingly ever escalating real estate prices. A prudent person should keep in mind that what caused our real estate bubble to begin with could also have the reverse effect and so make informed and wise decisions concerning one's personal financial and real estate matters accordingly.
-Yahoo Finance: “China could export a recession to everyone else, says ex-IMF economist”
July 5, 2017
-Asia Sentinel: “China's Coming Debt Crisis” March 27, 2017