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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 374.27-0.2%Nov 21 4:00 PM EST
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To: elmatador who wrote (61941)3/13/2010 3:31:25 PM
From: Hawkmoon1 Recommendation  Read Replies (1) of 217996
 
That's an EXCELLENT article and seems to provide some logical analysis why things might not all be "hunkie-dory" in China.

And I think the following brings out some critical points about much bad debt exists within China.

Local government investment companies had a total of $1.7 trillion in outstanding debt at the end of 2009, estimates Victor Shih, an economist at Northwestern University and the author of Factions and Finance in China. That's equal to about 35% of China's GDP in 2009.

In addition, banks have agreed to an additional $1.9 trillion in credit lines for local investment companies that the companies haven't yet drawn down, Shih says.

Together, the debt plus the credit lines come to $3.8 trillion. That's roughly equal to 75% of China's GDP.

None of this, Shih points out, is included in the IMF calculation of China's gross-debt-to-GDP figure of 22%. If it were, the number would be closer to 100%.

But the author makes a good point that Chinese savings might fund any outstanding debt, but there will be demands for better social services for their aging population.

I think Bejing is facing greater expectations from their populace, given that many peasants were exposed to how the "upper crust" of Chinese society is living on the coast.

Again.. well worth the read and certainly of a recommendation. Thanks for sharing.

Hawk
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