China’s total debt to GDP in 2018 would be at approximately 280% and in a year can go 300%.
Meanwhile, GDP growth is slowing dangerously, for the required levels to keep economy functioning properly and healthy, keeping unemployment low. The Trade War with USA makes things worst.
The huge Country, is trying to save the whole situation, by imposing capital controls and by Central Bank’s intervention, but these cannot be enough. A cleaning up is needed but it’s not gonna be easy, because of the wide corruption. A deleveraging procedure must take place and will take place, in order to adapt economy to smaller but healthier sizes. This, will cause a cash shortage and a real difficulty for private businesses to get financing or refinancing. Corporate defaults will happen; they are inevitable. As a result, consequences will spread to banks and banks are the foundations of (any) economy. Gloom and Doom can follow. … and we are talking for the second largest economy of our planet.
And now, have a look at the ratio of total debt in USA, to GDP.
Do you think that this situation is sustainable and the economy will keep functioning in a healthy and balanced way? Or…
