Home China China's Debt Bomb Is Ticking Away

China’s Debt Bomb Is Ticking Away

China has an unprecedented mountain of private debt that is threatening the country’s economy in a major way. Economists now agree that China’s debt addiction will probably not end well, raising questions of how a potential spillover could affect other nations.

Since 2008, private debt growth in China has increased by the equivalent of 19 trillion dollars, said U.S. economist Richard Vague in The Real News video featured further below.

All major economic crises have been caused by very rapid increases in private debt, Vague explained, adding that China’s debt addiction will have the same outcome.

Japan overdid things during the 1980s and early 1990s as well, he said, while giving other examples.

“You almost always end up with a financial reversal, financial calamity, or even a financial crisis,” he said.

See more from Vague in this video from The Real News:

China’s debt binge is the largest ever seen in a major economy.

The extent of the problem is evident in relation to its credit-to-GDP figures. It now takes four dollars of debt to create a dollar of GDP growth in China, said Ruchir Sharma, a global financial strategist with Morgan Stanley, according to Big Think.

Sharmin Mossavar-Rahmani, Goldman Sachs Private Wealth Management chief, told CNBC that Chinese credit-to-GDP numbers were tremendously high.

“We use the term that China could ‘submerge’ under the burden of its own debt,” Mossavar-Rahmani said.

Among China’s other challenges is a potential trade war with the U.S. under a new presidency and how money keeps flowing out of the country. More than $1.2 trillion has left the country since China’s shock devaluation of the yuan in August, 2015, according to Bloomberg in the below video:

LIKE us on Facebook, or follow us on Twitter.

Subscribe to our weekly email.

James Burke
What keeps the world ticking? James is always looking for the answer and the latest news from around the globe. When he's not behind his computer, he's basking in the Thailand sun, or dreaming of the southern hemisphere, where he grew up in rural Australia.

Most Popular

Constitutional Possibilities for a Second Trump Term: Dershowitz

Amid continuing suspicion of fraud in the 2020 U.S. presidential election, the Trump campaign has taken its objections to the projected results...

A New Theory: Water May Naturally Occur on All Rocky Planets

Life is deeply dependent on water, but where does water come from? Based on new research, researchers believe it may emerge in...

How to Conduct Preventive Maintenance for EVs

Electric vehicles are taking the world by storm. These news EVs are something of an enigma for drivers used to more traditional...

Trees and Green Roofs Can Help Reduce the Urban Heat Island Effect

An urban heat island is an urban area that is significantly warmer than its surrounding rural areas. The temperature difference is typically...