The problem of debt in China is not the bursting of a bubble. It is much worse. As the Middle Kingdom approaches the worldwide record of accumulated debt, productivity losses are becoming increasingly apparent. That is very bad news. Every economy relies of a certain amount of debt. That is an empirical fact. But 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.
China's Coming Debt Crisis
China's Coming Debt Crisis
China's Coming Debt Crisis
The problem of debt in China is not the bursting of a bubble. It is much worse. As the Middle Kingdom approaches the worldwide record of accumulated debt, productivity losses are becoming increasingly apparent. That is very bad news. Every economy relies of a certain amount of debt. That is an empirical fact. But 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.