Like many countries, China attempted to rein in its debt growth over
the past couple years, but ultimately gave up and is now back to piling
on even more debt. Bloomberg reports –
For almost two years, the question
has lingered over China’s market-roiling crackdown on financial
leverage: How much pain can the country’s policy makers stomach?
Evidence
is mounting that their limit has been reached. From bank loans to
trust-product issuance to margin-trading accounts at stock brokerages,
leverage in China is rising nearly everywhere you look.
While
seasonal effects explain some of the gains, analysts say the trend has
staying power as authorities shift their focus from containing the
nation’s $34 trillion debt pile to shoring up the weakest economic
expansion since 2009. The government’s evolving stance was underscored
by President Xi Jinping’s call for stable growth late last week, while
on Monday the banking regulator said the deleveraging push had reached
its target.
As I’ve been warning,
China has been experiencing a powerful credit bubble over the past
decade (see the chart below). China’s leaders inflated the credit bubble
in order to supercharge economic growth during and after the global
financial crisis in 2008/2009. China’s credit-driven economy has become
one of the main growth engines of the global economy, which has scary
implications because it’s even more evidence that the global economic
recovery is predicated on debt.
China’s aggressive credit expansion is a major contributor to the
global debt explosion over the past couple decades. Global debt has
increased by $150 trillion since 2003 and $70 trillion since 2008:
China’s credit bubble is very similar to Japan’s economic bubble
in the late-1980s. For many years, Japan’s economic growth seemed
unstoppable and many people believed that Japan would overtake Western
economies in short order. Of course, Japan’s growth miracle came to a
screeching halt in the early-1990s when the country’s bubble burst. By
ramping up debt so aggressively (which borrows economic growth from the
future), China is following in the same footsteps as Japan and will soon
experience the downsides of debt-fueled growth.
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The US Consumer Just Hit A Brick Wall: Here's Why In 15 Charts by Tyler Durden Tue, 03/05/2019 - 17:05 When it comes to the growth dynamo behind the global economy, nobody can match the US consumer - not even China: accounting for trillions in annual spending, the US consumer, who represents roughly 70% of US GDP, is also responsible for roughly 17% of global GDP, slightly ahead of the entire country of China. 世界経済の成長エンジンを議論する時、米国消費以上のものはないーー中国ではない：年間トリリオンドルを米国消費者は使っている、これが米国GDPの７０％、そして世界GDPの１７％を占める、中国全GDPよりも大きい。 However, as recent economic data has shown, the future of the US consumer is suddenly looking ominously cloudy, for two big reasons: rising interest rates, which as Deutsche Bank notes are "beginning to bite" as observed in the number of working hours in sector selling big ticket items... しかしながら最近の経済デ...
