Beware The Chinese Debt Dragon
News
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Posted 21/10/2016
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People often talk about eating Chinese and being hungry half an hour later. China just miraculously met market expectations for GDP growth in the last quarter at 6.7% annualised. The markets gave a collective sigh of relief on Wednesday as the much feared ‘hard landing’ appears to be avoided. But in a common theme in global economics at the moment, that annualised 6.7% GDP growth came courtesy of 20% debt growth over the same period. So it took $3 of debt to get $1 of GDP growth. Did you hear that on the news Wednesday?? Didn’t think so… In September alone China added, wait for it…$330 billion (a third of a Trillion) in debt. Check out this graph: