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Your numbers are off. You are comparing China's total debt, public and private, to just the US federal government's debt. For total debt China and the US actu

Your numbers are off. You are comparing China's total debt, public and private, to just the US federal government's debt. For total debt China and the US actually have very similar numbers. http://fingfx.thomsonreuters.com/gfx/rngs/CHINA-DEBT-HOUSEHOLD/010030H712Q/index.html http://fingfx.thomsonreuters.com/gfx/rngs/CHINA-DEBT-HOUSEHO...

Ajay-p 5y ago
Please, what this mean in simpler terms?
- christophilus 5y ago
  No one knows, but I think it means we're going to see a massive deleveraging event in both China and the US. But maybe we can all keep kicking the can indefinitely. Who knows?
  - beerandt 5y ago
    If Chinese are looking for alternatives to collapsing domestic investment, I don't see how they do that at the scale they need to without leaning further into US bonds, whether directly or via Chinese government using it to back up domestic offerings.
    - tevon 5y ago
      Do you think this would put us (the US) in a stronger strategic position going forward? It seems like the music has to stop eventually for Chinese growth, especially since the differential between "real" GDP and reported GDP is likely larger than even this seems. If they lean into US bonds, wouldn't that weaken their strategic position? I'm not sure they'd be willing to do so.
- topkai22 5y ago
  Public debt = all loans to the government of a country US Federal Debt = all loans to the US Federal Government (which excludes loans to state and local governments). Private Debt = all loans to non-governmental entities (individuals/businesses/corporations) in a country.
  - xyzzy21 5y ago
    In China there really isn't a difference - the Communist Party is partial owner of ALL "private" corporations.
    - eunos 5y ago
      If party owned Evergrande they don't need to have three red lines drama
- deleted 5y ago
  [deleted]
- bserge 5y ago
  People would afford fewer imports, pretty much. You'd think "China makes everything" but they do need raw materials and fuel. They also import a lot of food, not sure how necessary it is. So the smart thing to do is invest heavily into poor but resource rich countries in Africa.
eunos 5y ago
High private debt might be caused by relatively high saving rate and weak equity market in China. So instead of buying stocks they are buying bond.
frankbreetz 5y ago
The rate of change seems to be significantly higher for China Compared to the US, maybe this has to with growth rate of their GDP, but if they can't keep up with GDP growth, they will be in trouble
- xyzzy21 5y ago
  This is certainly underestimated by many who've never seen a differential equation in their life and probably can't pronounce it either.
worrycue 5y ago
I heard it’s actually quite hard to gauge debt in China due to “shadow debt” that isn’t on the books. So things might actually be worse than it seems.
- PaywallBuster 5y ago
  indeed, and the state is mixed up everywhere. Where does public and private end?
- threevox 5y ago
  That should surprise exactly no one, given how unreliable Chinese official figures are
  - bildung 5y ago
    That isn't what shadow debt / shadow banking means: https://en.wikipedia.org/wiki/Shadow_banking_system https://en.wikipedia.org/wiki/Shadow_banking_system
rsj_hn 5y ago
I would reply that your numbers are way off, since in an economy where by far the biggest borrowers are state owned enteprises, then you must count the debt of these enterprises as government debt even though according to NIPA data as cited it is considered private debt. Here we are talking about all the largest borrowers in China being government owned: China Mobile, ICBC, China Railway, China National Petroleum, SAIC Motor, Sinopec Group, etc. See https://fortune.com/2015/07/22/china-global-500-government-owned/ https://fortune.com/2015/07/22/china-global-500-government-o... Given the great difficulty truly privately owned businesses face in obtaining credit, and how most of them need to go to the shadow financial system, the bulk of private debt doesn't even show up in these measures, and the bulk of what is officially considered private debt should be counted as public debt. This creates all sorts of problems for China because if there is a banking crisis, then the banks, which are government owned, are lending money to state owned enterprises that are not allowed to fail. This is why you get the zombie bank problem in China - it's different than the situation in Japan. In Japan, the problem was real estate zombie loans, but in China the problem is zombie loans to politically connected state monopolies as well as individual real estate. China can perhaps say "screw the households" but it can't say "screw Sinopec".
- arbuge 5y ago
  > I would reply that your numbers are way off, since in an economy where by far the biggest borrowers are state owned enteprises, then you must count the debt of these enterprises as government debt even though according to NIPA data as cited it is considered private debt. It would seem to me that the amount of additional debt you could consider the government as having taken on by virtue of these being SOEs would however be compensated by the fact that they're SOEs... i.e. the government also has equity ownership in them. The asset would somewhat or entirely cancel out the liability as it where. The equivalent enterprises in the US aren't owned by the governemnt. Less debt, for sure, but less equity too.
  - nerbert 5y ago
    An insightful article by SCMP, can't say that this hasn't been vetted by the CCP: https://www.scmp.com/economy/china-economy/article/3135883/china-debt-has-it-changed-2021-and-how-big-it-now https://www.scmp.com/economy/china-economy/article/3135883/c...

Ajay-p 5y ago

Please, what this mean in simpler terms?

christophilus 5y ago
No one knows, but I think it means we're going to see a massive deleveraging event in both China and the US. But maybe we can all keep kicking the can indefinitely. Who knows?
- beerandt 5y ago
  If Chinese are looking for alternatives to collapsing domestic investment, I don't see how they do that at the scale they need to without leaning further into US bonds, whether directly or via Chinese government using it to back up domestic offerings.
  - tevon 5y ago
    Do you think this would put us (the US) in a stronger strategic position going forward? It seems like the music has to stop eventually for Chinese growth, especially since the differential between "real" GDP and reported GDP is likely larger than even this seems. If they lean into US bonds, wouldn't that weaken their strategic position? I'm not sure they'd be willing to do so.
topkai22 5y ago
Public debt = all loans to the government of a country US Federal Debt = all loans to the US Federal Government (which excludes loans to state and local governments). Private Debt = all loans to non-governmental entities (individuals/businesses/corporations) in a country.
- xyzzy21 5y ago
  In China there really isn't a difference - the Communist Party is partial owner of ALL "private" corporations.
  - eunos 5y ago
    If party owned Evergrande they don't need to have three red lines drama
deleted 5y ago
[deleted]
bserge 5y ago
People would afford fewer imports, pretty much. You'd think "China makes everything" but they do need raw materials and fuel. They also import a lot of food, not sure how necessary it is. So the smart thing to do is invest heavily into poor but resource rich countries in Africa.

eunos 5y ago

High private debt might be caused by relatively high saving rate and weak equity market in China. So instead of buying stocks they are buying bond.

frankbreetz 5y ago

The rate of change seems to be significantly higher for China Compared to the US, maybe this has to with growth rate of their GDP, but if they can't keep up with GDP growth, they will be in trouble

xyzzy21 5y ago
This is certainly underestimated by many who've never seen a differential equation in their life and probably can't pronounce it either.

worrycue 5y ago

I heard it’s actually quite hard to gauge debt in China due to “shadow debt” that isn’t on the books. So things might actually be worse than it seems.

PaywallBuster 5y ago
indeed, and the state is mixed up everywhere. Where does public and private end?
threevox 5y ago
That should surprise exactly no one, given how unreliable Chinese official figures are
- bildung 5y ago
  That isn't what shadow debt / shadow banking means: https://en.wikipedia.org/wiki/Shadow_banking_system https://en.wikipedia.org/wiki/Shadow_banking_system

rsj_hn 5y ago

I would reply that your numbers are way off, since in an economy where by far the biggest borrowers are state owned enteprises, then you must count the debt of these enterprises as government debt even though according to NIPA data as cited it is considered private debt. Here we are talking about all the largest borrowers in China being government owned: China Mobile, ICBC, China Railway, China National Petroleum, SAIC Motor, Sinopec Group, etc. See https://fortune.com/2015/07/22/china-global-500-government-owned/ https://fortune.com/2015/07/22/china-global-500-government-o... Given the great difficulty truly privately owned businesses face in obtaining credit, and how most of them need to go to the shadow financial system, the bulk of private debt doesn't even show up in these measures, and the bulk of what is officially considered private debt should be counted as public debt. This creates all sorts of problems for China because if there is a banking crisis, then the banks, which are government owned, are lending money to state owned enterprises that are not allowed to fail. This is why you get the zombie bank problem in China - it's different than the situation in Japan. In Japan, the problem was real estate zombie loans, but in China the problem is zombie loans to politically connected state monopolies as well as individual real estate. China can perhaps say "screw the households" but it can't say "screw Sinopec".

arbuge 5y ago
> I would reply that your numbers are way off, since in an economy where by far the biggest borrowers are state owned enteprises, then you must count the debt of these enterprises as government debt even though according to NIPA data as cited it is considered private debt. It would seem to me that the amount of additional debt you could consider the government as having taken on by virtue of these being SOEs would however be compensated by the fact that they're SOEs... i.e. the government also has equity ownership in them. The asset would somewhat or entirely cancel out the liability as it where. The equivalent enterprises in the US aren't owned by the governemnt. Less debt, for sure, but less equity too.
- nerbert 5y ago
  An insightful article by SCMP, can't say that this hasn't been vetted by the CCP: https://www.scmp.com/economy/china-economy/article/3135883/china-debt-has-it-changed-2021-and-how-big-it-now https://www.scmp.com/economy/china-economy/article/3135883/c...