News for hackers. Stuff that matters.

A comment on Why the World Is Too Optimistic About China's Economic Future. Parent comment

Re:Why the World Is Too Optimistic About China's Economic Fu... by adventured on Tuesday October 21, 2014 @06:53AM (#8486756)
The fundamental problem with China's growth since 2009, is that it has all come courtesy of truly massive amounts of debt.

To generate annualized 7% GDP growth requires five +/- times as much debt as they get in new GDP.

I don't see how an economic model built on growth via accumulating debt faster than any other country in world history has, is a sustainable model. They're courting disaster, and decades of stagnation, just like Japan did.

[ Parent | on HN ]
Re:Why the World Is Too Optimistic About China's Economic Fu... by pjc50 on Tuesday October 21, 2014 @12:01PM (#8487986)
Debt to whom, though? Remember that all debt is someone else's asset. This is where the wealth of China's rich individuals is going: back into the system as loans, bonds and investment to keep the machine going.
[ Parent | on HN ]
Re:Why the World Is Too Optimistic About China's Economic Fu... by sleeping_pills on Tuesday October 21, 2014 @08:37AM (#8486981)
Agree 100% but there are always idealists who thinks China is some miracle country pushing ahead of anyone else. China is basically your neighbor who just bought a second Porsche by taking out an even higher mortgage after his home price was marked higher by the bank. You can call that success. I call it unsustainable debt.
[ Parent | on HN ]