Thursday, August 6, 2015

China's Debt Bomb......A VERY PESKY FACT!

China's Debt Bomb

Whether you like it or not, China's economy is in on shaky ground and the nation's debt level is now extremely high. According to McKinsey & Company, China's total debt has quadrupled, rising from US$7 trillion in 2007 to US$28 trillion by mid-2014. Astonishingly, at 282% of GDP, China's debt as a share of GDP is larger than that of many developed economies!

The level of risk involved in China's shadow banking may well soon be tested by the ongoing slowdown in the property sector. Although anything can happen, we believe that the price deflation occurring in the commodities complex is forecasting a hard landing in China. Furthermore, China's stock market crash certainly does not bode well for Beijing's grand plan of transforming the nation into a consumer-led economy.



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