Has China finally taken on too much debt?

That's not how treasury bonds work

>nationaldebtclocks.org/debtclock/china
>nationaldebtclocks.org/debtclock/unitedstates
>ceicdata.com/en/indicator/china/household-debt
>usdebtclock.org/world-debt-clock.html

As you can see, their public and government debt is fine. So what's the fuss about China's debt? Its really a fuss about their corporate spending. Since its a state controlled capitalism with state monopolies, all those corporate spending is merely state spendings. Have you seen the mega projects of China? Those are just the tip of the ice berg as their economies grow even larger.

I'm fairly certain these are just superficial debt that people think is scary. It would be scary if a company in US took on those debts to create the next social media or dating sites. But this is China. Its all about infrastructure for their future. They plan to uplift another 300 or so million people out of poverty in the next 20 years. As the country seems to be run by PhD holders, engineers, scientists, and intellectuals, I doubt there is any real problem to see.

>I doubt there is any real problem to see.
*builds more ghost cities*

Yes, China is in a massive bubble.

>KB: We're in the such late stages of a game that is the largest global imbalance I've ever seen in my life. When you look at on balance sheet and off balance sheets, you look at on balance sheet in the banks, you look in the shadow banks. The number of total credit in the system, China is right at $40 trillion. Think about the number I just said. $40 trillion. And that's using an exchange rate of call it 6.7 to the dollar, right? So it's grown 1,000% in a decade. And we're on a $40 trillion credit system on $2 trillion of equity on maybe $1 trillion of liquid reserves.

If you have a flight plan and call it in but it only lists you, your men, Dr. Pavel there but only one of the 3 prisoners, who gets to stay on your aircraft?

Whoever talks first

They will do what any hive mind would do, pretend the problem doesn't exist and continue to drive their peasant class into the dirt

Wrong, all 3 get to stay on your aircraft, you open the door, fire a shot out and make it seem like you shot a man and threw him out of a plane.

No, because only one of them is expected in the wreckage

>Its really a fuss about their corporate spending
It's a fuss because for one available measures show chinese debt is growing almost 3 times faster than the economy and the business statistics coming out of China are notoriously prone to tampering by provincial officials so nobody knows exactly the full extant of the problem. Additionally many of the entities taking on debt are non-performing 'zombie corporations' owned by the state who depend on the regular infusions of cheap money from state run banks to remain solvent. These "zombie companies" employ vast numbers of Chinese workers and these toxic debts are classified as assets in Chinese banks. The debt issue is a landmine nobody wants to deal with because a potential deflation could cause millions of workers to be unemployed and wreck havoc with the Chinese financial system and world economy.

Why would you shoot a man before throwing him out of a plane?

>300% of GDP vs 50% of GDP
Odd.

>www.nationaldebtclocks.org
>Sweden and Norway have lower Debt as % of GDP than Britain and American
Fucking what? For Norway I can at least justify this based on oil money, but Sweden's got my clueless.

Just take another loan and let the next generation worry about it lmao.

The 300% figure is their ''PRIVATE DEBT" which means the cumulative debt of all corporations and business entities operating within a country. The 50% is "Public Debt" which is just the treasury bonds and other forms of official government borrowing. In China "PRIVATE DEBT" as its termed is somewhat misleading because most of that debt is from state owned corporations getting cheap loans from state owned lending institutions meaning that essentially the state is on the hook for it.

State owned banks in China are creating enormous amounts of credit which is being funneled to state owned corporations who have no real ability to ever pay them back.

dude china will grow larger xDDD

Not really, if the banks lending it are state owned and the corporations borrowing it are state owned then all they have to worry about is whether they create too much inflation.

Ok well you're at odds with most of the world's economists in that cavalier assessment.

I doubt it. I'm not saying it isn't a problem but there is no reason to think it would cause a collapse.

Having debt doesn't matter as long as you can keep own expanding your economy. China has quite a lot of room to do so, their domestic market is largely unutilized and they started colonizing Africa. Unless there is some ecological or social disaster they will be fine. If their economy starts to go to shit however they can start privatizing some of their huge state-owned companies and sell state bonds to their massive population.

Also, much of the world's manifacturing industry is in China and it would cause massive damage to all of the world's economy if it collapsed. So other countries and corporations would continue to give them money to keep them afloat. Basically China is too big to fail.

"Collapse" is an imprecise and alarmist but the continuing growth of private debt in China which is already at concerning levels poses significant systemic risks in the Chinese economy.

It's not actually private debt if the majority of it is owed by state owned companies to the state. Nor would it pose a systemic threat.

Just to be clear there are all kinds of reason why it is a bad idea to prop up state owned companies with state loans, it could cause inflation, you are lowering productivity by subsidising inefficient public companies and crowding out private ones and it is generally bad accounting.

However in terms of systemic risk at the end of the day you are talking about money the government owes itself in a denomination that the government can create out of thin air, no one is "on the hook" for it.

>Chinese investors prefer American government bonds
>This reflects well on the PRC

They sold that debt when the dollar was valued much higher. Now instead the debt is transferred internally.

>Basically China is too big to fail.
Well, that's scary.

>median age of 40
>massive Japan sized retirement wave about to hit
>rapidly increasing life expectancy for the old
> 1/4th the per cap GDP and none of the ability to poach young high skilled immigrants the way the US and EU can.

They're fucked.

But the autocratic regime is on the hook for continuing to raise living standards and pulling another 200 million out of poverty while the ratio of workers to pensioners explodes.

If your really is inefficient and your main competitive advantage was cheap labor, something you're losing, then you have a big problem.

China has been trying desperately to up domestic consumption and it hasn't worked. It'll only get worse as single children start having to support their parents.

Sweden is just as likely to cook their books as China. Theyre desperate to show the world that mass importation of 8th century rapists is an economic miracle

Why is Sweden having lower debt than UK or US a problem?

i thought the chinese consumer saves religiously?

I guess instead of automation they should just import a few 100 million spics.

>mass unemployment
The uprising would be almost assured

They are rolling ahead with that too

youtube.com/watch?v=wUAM-7jbhIw

State powered companies, fueled by automation, providing UBI for all, in the long term goal to make its citizens excel in the fields they want, be it physical or mental

>They are rolling ahead with that too
With the Mexican immigration program? You will have to provide actual sources on the Mexican immigrants to China rather than just randomly changing the topic again and again,

Automation you dumbass what else was the rest of the post for

>hasn't worked
>he types citing no source whatsoever
China has just started transitioning into a consumer orientated service society. It's already well on it's way. See PMI for service sector vs manufacturing

>Automation you dumbass what else was the rest of the post for

Who knows? I tried to have a proper conversation with you but you incoherently jump around all over the place.

Good night, try to actually make a coherent point where one post follows another next time.

im not that other guy

ANY DAY NOW

We had this thread a few days ago, and yes they do. In response to the 2008 financial crisis, they opened up lines of credit to continue growing which they did until 2011 when growth began to slow. Since then they've been taking on more and more debt in a desperate attempt to keep growth up. Impacting this is China's public ownership over all their banks, meaning if the banks go kaput so does Beijing's balance sheets. Additionally China's imperfect markets (a function of living in a communist country) have caused rapid expansion of extralegal and shadow banking systems.

To be clear, it's not clear if we're beyond the point of no return just yet. Beijing could realize the jig is up and write off all their bad loans as losses, which would result in a recession but wouldn't cause financial collapse to spread into the financial system itself, thus containing the damage.

PRC-owned banks have over five times the amount of debt issued then they own US Treasury Bonds.

>Its all about infrastructure for their future.

It was that ten years ago, today it's all Chinese tech stocks. And neither have proven to be worth their original valuations.

He was right about everything. Everything he had said is coming to pass, especially in the past four years with the massive expansion of credit and shadow banking in China. Everything here boils down to non-preforming loans issued by Chinese banks to meet government-mandated quotas.

Do they have pensions or some sort of welfare state? If not, then the old folk aren't a problem.

It's not a problem, it's just inexplicable.

>cover doesn't have a date on it
Thanks user!

Why? I mean there's a ton countries with lower debt level?

How the hell can Sweden, the country that has a welfare state so big that you could crush a man with it, have a higher relative amount of debt than the UK?

Keynesian economics, simply put.

Investing in an educated and well-cared for population creates a productive workforce whose needs are sated, and which doesn't need to endebt itself to stay afloat.

It's not voodoo, it's capitalism 101.

High taxes, no retarded military adventures. It's not exactly rocket science.

>there are people that unironicalally believe it

It was 2001 for your reference

By outpacing the interest rate of the debt through economic growth, which increases tax base that allows repayment of the debts? The yield of 10Y bond has been between 3-4% since 2005. Meanwhile, the economy has grown around 12% since then. Assuming the tax base grows linearly with GDP, 10 000 dollars loaned by the government in 2005 with 3.5% cost 14 150 to cash out in 2015. Yet, the Chinese tax base was 3.1 times larger than it was in 2005, leading to the situation where a single dollar loaned out in 2005 only cost fifty cents a decade later.

The same idea is feasible with all growing economies. U.S government debt yields are below U.S long term economic growth.

But US debts are frequently called in the very terms that they are set? Government bonds are a very simple financial instrument, nothing more. They can't be "called in", as they operate on fixed terms.

>very wealthy and productive population
>high taxes they gladly pay for the quality services
>small, well-managed country
>the US and Britain do have an oversized military and a fairly large welfare state respectively which closes the gap

UK and U.S have artificially low tax rates due to the faith in dynamic effects. U.K annual budget is 7% in the red. Also, since its GDP to debt ratio, even a few years of GDP growth (which Sweden has had since 2010) drastically reduces the rate.

The cost of Sweden's welfare state is absolutely miniscule compared to the cost of the US's and UK's endless wars.

They spend their money on their population. We spend our money on bombing brown people.

Its still investing tons in infrastructure today. The whole belt/road is all about infrastructure connecting EU/MiddleEast/Russia/SEA to China. There's also some decent investment in Africa and US/Australia/Canada.

While we use the traditional GDP measures to calculate China, this measure may not actually be correct (for both PPP and nominal). Some have suggested that their actual economy is 20% larger but due to Chinese under reporting, they are hiding their true threat to the US/world.

Military forces do not represent a significant portion of any western economy outside of US, and the idea that U.K would be somehow a Nordic country if not for military campaigns is absurd and reductionistic. Furthermore, it sells the idea that welfare state wouldn't cost a lot, which is nonsensical.

27.4% of Swedish GDP is spent on welfare. For UK, its 21.5%. For US, 19.3% U.K spends 1.9% of its GDP in military, US 3.1%, while Sweden spends 1.24%. The difference of 0.66% between Sweden and UK does not cover the welfare gap of 5.9%. U.K would have to grow the expenditure by 27%. U.S would have to increase it by increasing its expenditure by 41%. But I guess its those darn armies?

How much did they spend during the early 2000s? I can't imagine the militar spending while Afghanistan and Iraw were ramping up was the same as it is now.

Of course China is still investing in infrastructure, debts for them keep rising. This is undebatable and not my point. My point is that not all of these projects will return a profit which means the loan will go unpaid. If this happens too much, the bank runs out of income and stops operating.

>There's also some decent investment in Africa and US/Australia/Canada.

This is completely wrong. Most of the "infrastructure" in Africa is comparable to what western companies invest there and is not really notable (especially compared to France). For the US, all their major projects have utterly failed chief of which being Xpresswest and the new Victorville Airport CCRI and Air China were going to build. It totally fell through when the US government refused to issue reduced rate bonds for it or commit any public money. Likewise for the attempted Mexican HSR train between Mexico City and Yucatan, that fell through because the Mexican President's wife stole the money and CCRI didn't want to sue because they'd get kicked out of the country.

Most of the foreign investment happening is being done by individual Chinese citizens with individual properties. But this itself is being done because it allows for easy capital flight, a major problem that has gotten much worse in the past few years as Chinese citizens get enough money to escape China.

spending peaked in 2011 for the military, so it wouldn't have been much higher.

But muh commies

Capital flight is pretty much a nonissue for the last 3 months

US used 4.66% on the peak year of 2010, and around 3.5 to 4% from 2002 to 2007.

So long as Chinese citizens can afford flights out, there will be capital flight. Notice how Bitcoin started skyrocketing earlier this year right as the Chinese government began prohibiting certain forms of currency exchanges and moves. And notice how people will pay USD for Bitcoin.

t. japan 1991

I don't think this is the right board for this question.

Economics is associated with humanities and social science. It could go here but it could just as well go on /pol/, Veeky Forums, or even Veeky Forums. I think it's best off here than elsewhere but that's me.

econimica.blogspot.ca/2015/11/chinafictional-fairytale-vs-factual.html

China is the largest bubble in human history

This is the only board to ask this question, where else are you going to ask it?

Veeky Forums? they only care about memecoins

/pol/? Your thread will 404 in five minutes because the average user is too retarded and only cares for shitposting

/int/? Just a shitty meme board, /pol/ lite

Veeky Forums? Maybe

This, they are basically Japan in the 80's before the crash

crushingly high taxes

It could also be the biggest recovery, depending on how competent Chinese fiscal regulators are. For all my doom and gloom, IF Beijing takes the debt problem seriously now they could probably weather the storm without too many problems. But this is also heavily reliant on them being willing to red tag bad loans and let the infrastructure they support be liquidated. That's not an easy thing to do when everyone just wants more debt.

>history & humanities

/pol/ isn't capable of serious discussion of this topic and threads on Veeky Forums are quickly drowned out by altcoin garbage

>tfw china unironically pays people to spread propaganda on Veeky Forums

>Country is run by PhD holders so it will do fine

Swedish citizens are maxed out on loans. Everyone in Sweden is living on borrowed money which they have invested in overpriced house since there's a massive housing bubble here.

Sweden has top some of the highest taxes in the world, 58%, and that's only income tax with many many other taxes. The government is throwing away money like it's candy on
Halloween while mass importing unskilled thirld worlders at a rate never seen before in the history of mankind.

Sweden is on the brink of collapse, the Sweden you've seen since the 80s and onwards is coming to an end and at an extremely fast rate at that.

Sorry that /pol/ is inundated with 14 year old redditors and 30 year old Russian trolls but that is the future they chose

>58%
What is this fuckery

false flag

Basically it's progressive income tax. The more you earn the less you get to keep, after a certain level you pay 58kr in tax for every 100kr you earn, it's absolutely ridiculous. I know of several people who turned down promotions because it would legit net them less money for much more time spent working.

No.

[Citation needed]

Everyone’s gonna need sources or this shitposting 25 year rule breaking thread should be culled.

or you could just buy them out in exchange for what pretty much amounts to land. We would get 'city states' like Hong Kong but corporate owned.

cfr.org/blog/bitcoin-and-yuan

You are wrong. Don’t listen to me. Listen to the Council on Foreign Relations.

Brad Sester, an expert in the field of capital flows, explained that capital outflows have been negligible this year. China’s FX reserves have grown $230 billion this year while $2 trillion in dollar denominanted debt was paid off.

Now China is 99% domestically funded debt. It is not on the hook to foreigners like Thailand or Korea in 1997.

Did you skip out on your history class when they were covering what happened between WW1 and WW2? What you're talking about already happened and is called hyperinflation

Most of its debt is not external. There's not a single country that has collapsed due to debt in its own currency.

No. No it is not.

Fact 1.
If a government company owes a government bank money, there is no actual “debt”. The government owns both the debt and the asset.

All debt is someone else’s asset. In China, most of the debt is between STATE OWNED ENTERPRISES and STATE OWNED BANKS.

If anyone loses money, it’s the government. Guess who gets to print that money?

>hyperinflation
China’s inflation rate is 1.6% right now. Muh “bubble”.

Exactly. Furthermore, the Japan experience would be AMAZING for China.

Chinese would cry in joy if they could follow Japan’s experience.

Since 1990 Japan’s GDP is up 30% and the HDI (living standards) are up 25%. That’s left them with one of the best societies on Earth.

If China ends up just like Japan, that’d be great!
So what’s with this retarded analogy being used so often with China?

>$40 trillion credit system on $2 trillion of equity on maybe $1 trillion of liquid reserves.

Since everyone appears to be lacking these, here are sources from credible organizations and major Western banks. Oh, and the Chinese consumer themselves.

bloomberg.com/news/articles/2017-10-22/china-s-deleveraging-is-working-if-you-know-where-to-look

bloomberg.com/news/articles/2017-10-30/there-are-things-china-pessimists-just-can-t-see

google.com/amp/s/www.bloomberg.com/amp/news/articles/2017-09-11/china-s-consumers-haven-t-been-this-confident-in-two-decades

google.com/amp/s/www.bloomberg.com/amp/news/articles/2017-02-14/morgan-stanley-says-china-to-avoid-bank-shock-reach-high-income
>It’s likely that China’s debt management will follow a path similar to Japan’s, although economic growth will compound at a much higher rate over coming years. Morgan Stanley sees growth at an average of 4.6 percent in 2021-2025. That’s less than half the 9.6 percent average growth rate over the past three decades.

>"With a starting point of lower debt, (China’s debt to GDP today is where Japan’s was in 1980) and per capita levels (China’s per capita GDP (PPP) today is where Japan’s was in the mid-80s)," the analysts wrote. "By not allowing for a sharp appreciation of its currency as Japan did after the Plaza Accord, China today is arguably better positioned to still achieve growth rates that can outpace global growth."