Last week’s article by an ‘authoritative person’ published in the People’s Daily lambasting poor management of the Chinese economy, mentioned the evils of ‘leverage’ 18 times and going so far as to warn China’s debt-fueled growth could lead to an economic catastrophe.
A day later, the state media went big with a speech by President Xi Jinping reiterating the need to implement the government’s “supply-side” reform and transform the economy. Commendable words which put China somewhere around step five in the 12 steps of Alcoholic Anonymous, admitting “to ourselves, and to another human being the exact nature of our wrongs”.
But there were promises of reform when the new administration came to power three years ago, since which China has staged a major relapse, with total debt now at debt spiral to 247% of GDP, according to Bloomberg Intelligence estimates.
This week, Bloomberg also reported that Chinese borrowing in April included 1 trillion yuan ($153 billion) of regional government notes. It would appear to be very difficult for the Chinese economy to forego the credit binges which deliver ever-declining economic boosts.
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