China’s Great Wall Of Debt (Anthony Fensom) from The Diplomat
"China’s great leap forward economically has now led the communist nation to join its developed rivals in the major debtors club. ... According to a new report by the McKinsey Global Institute (MGI), China’s debt has quadrupled from $7 trillion in 2007 to $28 trillion as of mid-2014, reaching 282 percent of gross domestic product (GDP) and higher than the level of the United States. Continuing its current pace of growth would see China’s debt reach 400 percent of GDP by 2018, the equivalent of Spain. ... As much as $9 trillion of debt is directly or indirectly linked to the real estate sector, including most of the loans by the shadow banking sector, with loans of around $6.5 trillion. In addition, slowing property markets increase the risk of a blowout in local government debt, with up to 40 percent of debt servicing and repayments funded by land sales. ... A senior Chinese government official has told the Australian Financial Review that conditions appear “more and more like the Asian financial crisis,” with as much as $80 billion leaving the country in December alone. The capital flight has sparked concerns of a sharp decline in the exchange rate causing a credit crunch among indebted corporate borrowers."
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