Chinese debt-to-GDP ratio approaches 300 %

Posted by IDQWE001 > 2023-04-05 15:08 | Report Abuse

The People’s Bank of China reports that the combined domestic debt of corporations, households and the public sector increased last year to a level equivalent to 280 % of GDP (285 trillion yuan or 36 trillion euros), up from 255 % of GDP in 2019. When China’s foreign debt (which the PBoC estimates to be 14.5 % of GDP at the end of June) is included, total debt rises to about 295 % of GDP. Due to the covid crisis and related measures, the debt-to-GDP ratios of many countries increased significantly last year. Figures from the Bank of International Settlements (BIS) for over 40 countries suggest China’s the increase in debt-to-GDP ratio from the start of 2020 to end of June was quite ordinary compared to the other countries. China’s debt-to-GDP ratio, nevertheless, is distinctly higher than in other emerging economies and on par with US and euro area, which have more developed financial markets. China’s piling on of debt has long raised concerns among observers of the Chinese economy because rapid descents into indebtedness in other countries have typically led to major economic collapse or severe banking crises. Moreover, China was already engaged in efforts to bail out small and medium-sized banks before covid-19 struck, with so at least 500 billion yuan (BOFIT Weekly 40/2020) in public funds already expended. The lion’s share of Chinese debt exists in the form of bank loans taken by the corporate sector. During the covid pandemic, certain branches experienced significant declines in the ability of firms to service their debts. Stress tests released by PBoC in November showed that 10 of 30 banks were would fail even under the mildest stress scenario, which only assumed that GDP growth would be 1.6 % in 2020 and 7.8 % in 2021. The stress tests comprised all of China’s systemically critical banks.

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720 comment(s). Last comment by IDQWE001 2023-06-28 16:10

qqq47660

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Posted by qqq47660 > 2023-04-23 11:25 | Report Abuse

When u have someone like zelenski, Ukraine becomes a wasteland

IDQWE001

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Posted by IDQWE001 > 2023-04-23 13:50 | Report Abuse

RUSSIAN Cash Crisis - Ruble CRASHING Against US Dollar, Yuan & Rupee as Russian Economy Slumps

https://youtu.be/By9fcFMMHko

No money to fight EU sanction is working.

IDQWE001

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Posted by IDQWE001 > 2023-04-23 17:54 | Report Abuse

China’s March CPI, PPI Falls. 'Winter has come for the Chinese economy,'

China’s consumer price index (CPI) and producer price index (PPI) data for March both fell short of expectations year-on-year. The communist regime’s economic development model is in a vicious cycle of balance-sheet recession, says an economist, and this is just the tip of the iceberg. China’s economic winter will worsen, he predicts.

China’s CPI rose just 0.7 percent year on year in March, its slowest pace since September of 2021, and down 0.3 percentage points from February, according to data released by the National Bureau of Statistics of China on April 11. An analysis by Chinese news website Caixin suggests that aggregate demand remains weak.

Meanwhile, China’s PPI fell 2.5 percent year on year in March, an additional decrease of 1.1 percentage points, hitting its lowest level since July 2020.

Both figures were below consensus estimates from Wind, a Chinese provider of financial data and analytics tools, according to the South China Morning Post.

Just the Tip of The Iceberg. the economic development model of the Chinese Communist Party (CCP) is broken. The current numbers are just the tip of the iceberg, he says. In economics, the situation is known as a balance-sheet recession.“This is very similar to what happened in Japan after the bubble economy burst, which means that China is actually going down the same path,” Fan told The Epoch Times on April 12, saying China’s economic development model largely replicates the problems of Japan’s real estate bubble economy in the 1980s and 1990s.

IDQWE001

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Posted by IDQWE001 > 2023-04-23 17:55 | Report Abuse

“The core of the problem is debt issuance,” he said. “Debt is an interesting thing. It’s a very important factor in economic growth.”

“For example, if I have a company and want to develop a project, I am not likely to use my own money. I must borrow money, that is, from the bank. If the project has great development potential and makes a lot of money in the medium and long term, I will pay back the bank. This is a normal economic operation. In other words, debt is necessary to promote economic development.”

Normal economic operations are complicated, however, by corruption and government collusion, he added. “The problem of collusion between government and businesses is very serious in China. There are many privileged people who borrow money from banks, and the banks dare not refuse to lend it, but these projects are actually not profitable.”

“In the process, however, many people get benefits in various ways and split the money, [but] the projects cannot develop well, so they cannot make money. When there is more of this kind of debt, it has a negative impact.”Good and Bad Debt
There are always good debts and bad debts in society, and a healthy economy should have a mechanism for allocating money to good debts, which will then reduce the chance of bad debts, Fan said. This is the basic environment that will allow a healthy economy to grow and develop continuously.

“But China is out of that basic environment,” he said. “The problem lies in that the CCP has issued too much debt in the past, and it’s focused on real estate.”

“Why does real estate always create financial problems? Why is it always a big problem? The reason is psychological expectations.”

There are many important indicators of how society works, Fan explained, but not all have the same psychological effect. While some of them do not arouse optimistic expectations, indicators such as the stock market and financial assets can easily encourage optimism, so when they rise, people expect them to continue to rise. Those expectations frequently include the real estate market.

“In professional economic study, the biggest fear is psychological expectations,” Fan said. “Why is it troublesome when expectations develop? Because people become irrational. The various policy adjustment tools that governments can adopt are effective only when people are rational. When society as a whole becomes irrational, any policy tool becomes ineffective.”

One of the reasons for the property bubbles in Japan and China was inflated expectations, which led to an inflated bubble, according to Fan. However, the CCP authorities did not deal properly with the situation.

“Why? Because numbers look beautiful,” he said. “Before the bubble burst, it was shiny and beautiful. Everybody was making a lot of money. Weren’t they happy? Who wants to be the whistle-blower? And what happened after the bubble burst, which is what’s happening in China now, is called a balance sheet recession.”

IDQWE001

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Posted by IDQWE001 > 2023-04-23 17:56 | Report Abuse

Consequences of Balance-Sheet Recession. the consequences of a bubble bursting are severe in the short term because the government does not usually intervene too much in the market. However, the Chinese market is different, since the CCP controls all sectors.

“So what the CCP is doing now is preventing [companies] from going out of business, because there will be a chain of closures,” he said.

For example, if A lends B $1,000, B then has the ability to lend that $1,000 to C, and so on, and the debt can continue to cycle.

However, when that cycle is interrupted or collapses, he said, “A closure chain will follow the collapse, and the last guy will say, ‘I can’t make money. I have a loss and I can’t pay that $1,000 back.’ Then it comes back from D, C, B, A. Nobody can pay their debts.”CCP’s approach is to prevent companies from closing by using a variety of tools to extend debt maturities. The CCP’s assumption is that there will be no chain reaction as long as companies do not close down.

On the contrary, Fan said, this strategy only reduces the intensity of the problem, instead of solving it, “because debts have to be paid sooner or later, and someone has to pay them.”

“In the past, China’s economy was largely driven by a lot of debt issuance, including housing,” he said, but “that cycle has stopped now because the housing market is coming down, the economy is shrinking, and the overall economy of the whole society is going down.”

Fan noted that when debt problems arise, the first challenge an individual or a company faces is the inability to borrow money.

“In other words, his or her entire economic activity is limited,” Fan said. “The investments and activities he or she can do are limited, so investment will decrease.”

Secondly, consumption will decrease. With too much debt, both individuals and businesses cut back on spending, leading to a drop in consumption. When there is less consumption on all fronts, prices will fall.

IDQWE001

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Posted by IDQWE001 > 2023-04-23 17:57 | Report Abuse

“That is to say, amid a shrinking private demand, prices will definitely go down, so will inflation, and even deflation will occur. Once deflation occurs, it will be hard for the government to find any tools to deal with it.”Fan said that price weakness in China is an inevitable phenomenon. The reason why balance-sheet recessions are difficult to clean up once they occur, and usually last for a long time is that they form a vicious cycle.

“The vicious cycle means that prices don’t rise, or in a worse case, a deflation leads to negative price growth. This will greatly discourage investment, and poor investment will create fewer jobs, so private consumption will further deflate,” he said.

‘An Economic Nightmare’
Fan explained that the economic mechanism of society has a cyclical nature. China is now in a cycle of balance sheet recession, with prices, investment, and other economic factors falling. As the government adopts austerity measures due to its lack of money, everything is shrinking.

“The shrinkage of one variable leads to that of another, and the cycle continues,” he said. “It’s an economic nightmare.”

“That is to say, the winter has come for the Chinese economy. It has come for a long time, and it’s going to feel colder and colder now because all the indicators are starting to move in that direction, and a cycle is slowly emerging. Once the cycle starts, it’s going to last quite a long time.”Fan said the CCP’s numbers are dismal even if they have been “glorified.”

“Nobody knows the actual numbers,” he said, “but from all indications, it looks very bad. I think one important expectation is that these phenomena will not change in the short term.”

“The balance sheet recession is a particular recession,” he said. “It’s a very troublesome one, and it’s a very large one.”

“The volume of the CCP’s local debts and real estate bubbles [is] very large … so large that it cannot be absorbed in a short period of time.”

IDQWE001

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Posted by IDQWE001 > 2023-04-24 09:14 | Report Abuse

Why the IMF is Worried About China's Economy

https://youtu.be/NAgP-l3k7Ec

IDQWE001

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Posted by IDQWE001 > 2023-04-25 17:59 | Report Abuse

$300B in Debt! The province is forcing central government to bail it out, but CCP has no more money.

https://youtu.be/7Sf4VkQgBKg

qqq47660

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Posted by qqq47660 > 2023-04-25 18:06 | Report Abuse

Sick Malaysian with a need to demonise China...very Sick

stockraider

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Posted by stockraider > 2023-04-25 18:11 | Report Abuse

Look here loh!

The above article is misleading loh!

U notice they mentioned the debts here is define as corporations, household and Public Debts.

If u look at USA....their US 34.2 trillion debts only comprises of PUBLIC DEBTS mah!

I m sure if USA use the same definition as above....USA overall debts will exceed 5x of its GDP mah!

qqq47660

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Posted by qqq47660 > 2023-04-25 18:36 | Report Abuse

From 1980 to now China has faced and solved far bigger crisis...Gordon Chang's and collapse of China is never absent and also never correct

qqq47660

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Posted by qqq47660 > 2023-04-25 18:38 | Report Abuse

HK has drop for a few days due to rumors that Biden will announce ban on investing in China...of course this is causing some panic

qqq47660

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Posted by qqq47660 > 2023-04-25 18:40 | Report Abuse

Stock market will be up and down but real economy will carry on.

foongsh

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Posted by foongsh > 2023-04-25 18:43 | Report Abuse

Posted by IDQWE001 > 42 minutes ago | Report Abuse

$300B in Debt! The province is forcing central government to bail it out, but CCP has no more money.

https://youtu.be/7Sf4VkQgBKg

Plenty of white elephants. not enough to feed their people jobless, retire funds, insurance, stop housing loans etc.

qqq47660

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Posted by qqq47660 > 2023-04-25 20:54 | Report Abuse

in the last 40 years, the CPC has faced far bigger problems and solved them

qqq47660

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Posted by qqq47660 > 2023-04-25 20:55 | Report Abuse

China got no inflation.......the west would give a leg and a hand to be in such favorable position.

IDQWE001

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Posted by IDQWE001 > 2023-04-25 21:54 | Report Abuse

Posted by foongsh > 3 hours ago | Report Abuse

Plenty of white elephants. not enough to feed their people jobless ........

CCP first priority to keep their power and do publicity for show. Rakyat always last and nobody care.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:02 | Report Abuse

america's black elephants is dropping bombs around the world.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:04 |

Post removed.Why?

qqq47660

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Posted by qqq47660 > 2023-04-25 22:05 | Report Abuse

idq, foong............know nothing about China................all u know is American brain washing propaganda.

foongsh

1,378 posts

Posted by foongsh > 2023-04-25 22:09 | Report Abuse

北京周邊房價跌得有多慘 從165萬到60萬；杭州房價暴跌 房奴慘了？；製造業小老闆看不到未來；跪地求水孫國友女兒再發聲

https://youtu.be/t5SeldCJRC0

foongsh

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Posted by foongsh > 2023-04-25 22:11 | Report Abuse

Han Zhou & Beijing property price dropped below the balanced housing loans.. housing loan RMB 2 million current property price RMB 1.2 million.

foongsh

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Posted by foongsh > 2023-04-25 22:12 | Report Abuse

middle class fallen into bad debt trap ..

qqq47660

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Posted by qqq47660 > 2023-04-25 22:13 | Report Abuse

america is destroying globalisation because America is unable to compete.

foongsh

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Posted by foongsh > 2023-04-25 22:14 | Report Abuse

广州经济死了比鬼城还恐怖，烂尾楼越来越多买房者集体崩溃，失业摆摊满大街城管笑疯了，又有大批银行低调宣布倒闭，第二波失业潮来袭富士康成救命稻草，美国制裁不断中国老板疯狂挤往越南，底层人已被逼疯生不如死

https://www.youtube.com/live/P1JmaMrbpV8?feature=share

qqq47660

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Posted by qqq47660 > 2023-04-25 22:14 | Report Abuse

desperate to attack China and find ways to attack China because America is unable to compete........that is all.

foongsh

1,378 posts

Posted by foongsh > 2023-04-25 22:15 | Report Abuse

https://www.youtube.com/live/P1JmaMrbpV8?feature=share

广州经济死了比鬼城还恐怖，烂尾楼越来越多买房者集体崩溃

qqq47660

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Posted by qqq47660 > 2023-04-25 22:17 | Report Abuse

in the last 40 years, China has over come far bigger problems and come out ahead each time.

foongsh

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Posted by foongsh > 2023-04-25 22:17 | Report Abuse

Jobless, pay cut, abandoned housing project, stop paying housing loan, same mother story of white elephant of Xi.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:18 | Report Abuse

China has no inflation..................and plenty of tools available and most important a united population.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:19 | Report Abuse

as long as got CPC, got unity , what cannot solve?

qqq47660

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Posted by qqq47660 > 2023-04-25 22:20 | Report Abuse

China got no inflation.......the west would give a leg and a hand to be in such favorable position.

IDQWE001

2,992 posts

Posted by IDQWE001 > 2023-04-25 22:21 | Report Abuse

Posted by foongsh > 3 minutes ago | Report Abuse

https://www.youtube.com/live/P1JmaMrbpV8?feature=share

广州经济死了比鬼城还恐怖，烂尾楼越来越多买房者集体崩溃

Due to stop paying housing loan local bank running out of cash, depositors can't withdraw their own money. Very pity

qqq47660

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Posted by qqq47660 > 2023-04-25 22:24 | Report Abuse

the last time China fell was in the 1930s because Chiang KS was unable to control inflation.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:25 | Report Abuse

Malaysia has every thing before....including abandoned projects, bank runs, ................

qqq47660

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Posted by qqq47660 > 2023-04-25 22:28 | Report Abuse

what China is facing is nothing compared to the 1990s and other times...........in fact China is the envy of the world. with strong financial position and zero inflation.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:31 | Report Abuse

America is in far worse shape facing inflation and a recession.

foongsh

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Posted by foongsh > 2023-04-25 22:34 | Report Abuse

Posted by IDQWE001 > 8 minutes ago | Report Abuse

Due to stop paying housing loan local bank running out of cash, depositors can't withdraw their own money. Very pity

That's why the citizens refuse to get married and declined in populations, aging issue slow down the productivity. Couples not able to support their babies education and living

qqq47660

9,007 posts

Posted by qqq47660 > 2023-04-25 22:36 | Report Abuse

if China is doing as badly as u say, then Biden would not have to worry so much and keep finding ways to straggle and contain China.

qqq47660

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Posted by qqq47660 > 2023-04-25 22:37 | Report Abuse

look at this idq foong..............the content creators u quote are not experts.............these are just propagandist with own agenda .

qqq47660

9,007 posts

Posted by qqq47660 > 2023-04-25 22:38 | Report Abuse

look at this idq foong..............the content creators u quote are not experts.............these are just propagandist with own agenda .

and their agenda is making money from i.diots and from the US government.

IDQWE001

2,992 posts

Posted by IDQWE001 > 2023-04-25 22:44 | Report Abuse

Posted by foongsh > 4 minutes ago | Report Abuse

That's why the citizens refuse to get married and declined in populations, aging issue slow down the productivity. Couples not able to support their babies education and living.

This is very truth and all proven in the videos.. hundred of videos posted almost everywhere in China. Evil supporters are very anxious, helpless, angry, fear, lonely etc. because he knows all these videos are true and happened. nowhere he can deny it.

qqq47660

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Posted by qqq47660 > 2023-05-18 21:47 | Report Abuse

Thesis on the collapse of China has been around for decades...but no use

foongsh

1,378 posts

Posted by foongsh > 2023-05-18 22:13 | Report Abuse

Posted by IDQWE001 > 3 weeks ago | Report Abuse

Deflation world number 1.

qqq47660

9,007 posts

Posted by qqq47660 > 2023-05-18 23:30 | Report Abuse

In a world attacked by inflation, when u don't have the disease u are king.

supersaiyan3

3,134 posts

Posted by supersaiyan3 > 2023-05-19 02:51 | Report Abuse

Deflation much worse than inflation. Hopeless if you don't know that. lol

IDQWE001

2,992 posts

Posted by IDQWE001 > 2023-05-19 08:39 | Report Abuse

Posted by supersaiyan3 > 5 hours ago | Report Abuse

Deflation much worse than inflation. Hopeless if you don't know that. lol

Obviouly this joker does not know what is deflation. lol.

qqq47660

9,007 posts

Posted by qqq47660 > 2023-05-20 08:49 | Report Abuse

Consumer spending in China is very healthy and expanding. And no inflation...people dream of it also cannot get

qqq47660

9,007 posts

Posted by qqq47660 > 2023-05-20 08:50 | Report Abuse

All these media narratives, just so ridiculously distorted and agenda driven

qqq47660

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Posted by qqq47660 > 2023-05-20 08:53 | Report Abuse

America economy is at risk from many directions....yet, can find time to bad mouth China...ridiculous or not?

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