lundi 23 mars 2015
China looks 'a lot like the U.S. in 2008'
Posted on 17:35 by nice news
Sure, China's growth isn't what it used to be, but is the country on the brink of a financial crisis?
Not if you ask its leaders. Vice Premier Zhang Gaoli speaking at the China Development Forum in Beijing on Sunday said China's economic slowdown is stabilizing. Zhang pointed to "employment, services, high-tech industries, new industries, private investment and innovations," as bright spots in China’s economy.
But earlier this month, China set its 2015 GDP growth target at around 7% which is the lowest in 11 years and down from 7.4% in 2014. The economy is being weighed down by a slowdown in real estate and overcapacity at its factories as well as growing local debt.
China's central bank has cut interest rates twice since last November and freed its banks to lend more over the past few months.
The Chinese government is also expected to see its largest budget deficit since the global financial crisis this year. In the spring issue of Democracy Journal, Richard Vague, managing partner at Gabriel Investments, says it’s not the public debt that is so worrisome. He says investors should look closely at ballooning private debt in China.
Vague says private debt is a more important factor than public debt in leading to financial crises and he thinks China is heading in that direction. Vague has studied all 22 financial crises for which there is data. He says they all have two things in common: a rapid run-up in private debt and an already high level of private debt to begin with.
Not if you ask its leaders. Vice Premier Zhang Gaoli speaking at the China Development Forum in Beijing on Sunday said China's economic slowdown is stabilizing. Zhang pointed to "employment, services, high-tech industries, new industries, private investment and innovations," as bright spots in China’s economy.
But earlier this month, China set its 2015 GDP growth target at around 7% which is the lowest in 11 years and down from 7.4% in 2014. The economy is being weighed down by a slowdown in real estate and overcapacity at its factories as well as growing local debt.
China's central bank has cut interest rates twice since last November and freed its banks to lend more over the past few months.
The Chinese government is also expected to see its largest budget deficit since the global financial crisis this year. In the spring issue of Democracy Journal, Richard Vague, managing partner at Gabriel Investments, says it’s not the public debt that is so worrisome. He says investors should look closely at ballooning private debt in China.
Vague says private debt is a more important factor than public debt in leading to financial crises and he thinks China is heading in that direction. Vague has studied all 22 financial crises for which there is data. He says they all have two things in common: a rapid run-up in private debt and an already high level of private debt to begin with.
China looks 'a lot like the U.S. in 2008'
Categories: China looks a lot like the U.S. in 2008
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