The Chinese Government Likely Borrowed More than the US in 2017

Post by DenisM » Mon, Jul 16, 2018, 3:00 PM UTC

dnomad wrote: post #43

fps_doug wrote: post #7

Earlier quoted context omitted.

It absolutely isn't. The funny part is, for the past 12+ years voices predicting an economic collapse of China have gotten stronger and stronger, but it just doesn't happen. Every time they passed some magic number in some statistic it was all "zomg collapse is imminent!" I guess with a government like they have you have greater possibilities to cover up and postpone the effects, but who knows how this will manifest.…

Eh it's absolutely sustainable. China is a monetary sovereign. All of this debt is issued in a currency that they can literally create out of thin air. There is zero possiblity that China will default on this debt. And China has been very careful to avoid externally denominated debt. The only real risk here currency revulsion. At some point there is a risk that nobody will want the currency. But the risk of internal…

Post by swfsql » Mon, Jul 16, 2018, 3:02 PM UTC

adreamingsoul wrote: post #2

In economic terms, how is this sustainable?

Post by dpark » Mon, Jul 16, 2018, 3:05 PM UTC

ihsw2 wrote: post #53

chvid wrote: post #18

China is still a developing nation. That means that China can invest in infrastructure (roads, trains, airports, education) which have high real return making the increase in debt much less of a problem. This is also the reason why China has grown persistently 7-10% over the past two decades compared to USA which have grown 2-3% in the same period. Per person China's GDP is less than a fifth of the US hinting that th…

Using per person GDP when discussing China is a cruel joke. Like most usages of per person GDP in any country, it glosses over regional disparities and (more importantly) economic equality measures like Gini coefficient. Taking Gini coefficient into consideration, China still has a long way to go.

Post by seanmcdirmid » Mon, Jul 16, 2018, 3:07 PM UTC

vondur wrote: post #62

Bucephalus355 wrote: post #3

And this is the deficit we know about. In reality it could be much larger, something like 1000% of GDP. The situation is the same with China’s military budget. In reality it’s probably 2x or 3x larger than the official numbers we have.

I've read that China spends more on internal security rather than normal Military spending.

Post by gonvaled » Mon, Jul 16, 2018, 3:10 PM UTC

RobertoG wrote: post #57

moomin wrote: post #11

Earlier quoted context omitted.

Broadly, constant borrowing is sustainable, just look at any European economy. As long as your tax base grows faster than your interest payments there’s no unavoidable problem. This? It’s not sustainable. Sooner or later this will result in a correction. This could range from aggressive budgetary measures, an internal crisis all the way to China monetising its overseas investments (which are extremely extensive).

You can't compare the Euro countries to China because the European countries are borrowing in what, in essence, is a foreign currency. For those countries, constant increasing of the debt is hardly sustainable. China has not that problem. The only danger for China is inflation (that can be controlled with, for instance, taxes), otherwise, the People's Bank of China can buy directly the debt and nothing would happen.…