02-10-2019, 10:02 AM
The trade war with the US is getting more of today's China-focused headlines, but the world's second-largest economy is facing an even greater problem. "The biggest concern regarding financial stability and the sustainability of economic growth has been China's ballooning debt problem, especially in the corporate sector," according to a note published by JPMorgan. Chinese corporate debt is among the highest in the world — it's a stunning 162% of gross domestic product.
JPMorgan: China 'zombie' corporate debt pile derailing economic growth - Business Insider
And China has a history of tightening too much, and slowing an economy that still structurally relies on credit to generate internal demand (the flip side of high savings) whenever it tries to wean the economy off bank and shadow bank lending. Look at the weakness in Chinese imports in the chart above in late 2014 and most of 2015. That’s the last “tightening” cycle.
China's Slowdown and the World Economy | Council on Foreign Relations
China's economic data show the country is under major strain from attempting to rein in debt. And it isn't just corporate profits or the financial sector that are getting hit, weakness in consumer spending has spread across the economy. Part of this is because Chinese consumers have taken on a bunch of debt really fast.
Chinese consumers debt load worsens slowdown - Business Insider