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The Chinese Government Likely Borrowed More than the US in 2017

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31–40 of 159 posts

Re: The Chinese Government Likely Borrowed More than the US in 2017

#31
It it like using LOC towards judging the complexity of a code base :

"God 100K ! your code must be filled with so much boiler plate !"

- During the Second World War Britain / US went deep in the red to fund their survival, I wonder if anyone

though "We cannot afford to go into debt to defeat the Nazis !".

- Debt and deficit by itself is neutral - being a creditor is not inherently a good thing just like being

a debtor is not inherently a bad thing.

- If you look at the list of countries that have the lowest debt / Gdp ratios you will find its mostly low income, low productively countries, the question is not "damn how do they not need credit !" but "why are creditors not willing provide credit to these countries".

- A country with high deficit is also a country with either high FDI or high rate of internal investment, its

just doesn't sell as good a headline to say that though.

- For China is makes sense since they are quickly ageing, so the current cohort of working age people will

have high savings to draw down from at old age, same for the US / Japan / EU.

- The big question is what does the saving and investment get you ? Is it to fund foreign wars like Vietnam during Nixon, real estate speculation, education for the next generation ?

- The world is awash with credit and savings due to rise in income across all of humanity, driving down interest rate, its a good time to be a debtor and a awful time to a creditor (only generally, if you are a creditor/debtor in the payday loan sector then the inverse applies ).

Re: The Chinese Government Likely Borrowed More than the US in 2017

#32
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…

This is skirting around the edge of an important point: increase in absolute debt level is fine in any economy, what's potential trouble is changes in the rate of debt increase - specifically vs GDP growth - because it affects the total disposable income you have to service it.

Where China has a risk is if they can't transition to a developed country's style of debt spending where GDP growth is much lower. It's also where endemic corruption becomes a big problem.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#34
post #25
post #22

Earlier quoted context omitted.

No, it seems to be the other way around. China's GDP figures are definitely false but likely to be inflated, not suppressed.

Can you explain why that is for the ignorant ones like me?

A country might want to inflate their reported GDP to make the country look more attractive to foreign investment.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#35

In economic terms, how is this sustainable?

If a government prints its own currency there's not even a theoretical limit to the total amount it can borrow.

There is a limit to the total rate of government spending - spending beyond the rate of the economy's ability to produce - which causes hyperinflation. That is unrelated to the deficit though (theoretically it could even happen in surplus e.g. if you destroyed all your factories and farms).

Re: The Chinese Government Likely Borrowed More than the US in 2017

#36
post #24

Earlier quoted context omitted.

Then they'll get 2 additional armies every single turn! And a territory card!

What is the reference here ? Is it the same reference as neighbour comment about Tasmania and daemon armies ?

RISK game

Re: The Chinese Government Likely Borrowed More than the US in 2017

#37
post #12

In economic terms, how is this sustainable?

China is (officially) growing at ~7% per year right now, so adding $700 billion to their debt pile barely changes the debt/GDP ratio, it might even still fall but I'd have to check the exact figures.

Does anybody believe that growth rate anymore?

Re: The Chinese Government Likely Borrowed More than the US in 2017

#38
post #22

Earlier quoted context omitted.

No, it seems to be the other way around. China's GDP figures are definitely false but likely to be inflated, not suppressed.

> China's GDP is probably 10% of what they reported. > other way around ... likely to be inflated, not suppressed. If their GDP is actually 10% of what they report, then the reports are inflated.

Edit: Never mind, I can't read. :)

The comment you are replying to is suggesting that the actual figures are inflated, not the ones they report, meaning actual GDP is higher than reported GDP.

Re: The Chinese Government Likely Borrowed More than the US in 2017

#39

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.

Indeed, without real transparency, how do we know anything at all?

Re: The Chinese Government Likely Borrowed More than the US in 2017

#40
post #12

Earlier quoted context omitted.

China is (officially) growing at ~7% per year right now, so adding $700 billion to their debt pile barely changes the debt/GDP ratio, it might even still fall but I'd have to check the exact figures.

Does anybody believe that growth rate anymore?

Nobody
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