Its A Debt Crisis, Not A Liquidity Crisis – China Is In A Much Deeper State of Indebtedness!
Is it really possible that China is bankrupt? It appears that China really is in a cash crunch, and has fooled the rest of the world for quite some time. It appears that China’s debt is well over 507 trillion dollars, and yet per capita income is less than $4500. Compared to the US debt and it’s per capita income, China is in a much deeper state of indebtedness. China’s debt seems quite massive and unaffordable. Also, we cannot rely on the GDP numbers being generated from a completely closed society.
There could be great trouble brewing. No wonder Bernake is backpedaling and keeping the QE on the table.
See this interesting report here:
Here are some shocking facts Elliott discusses in a WND column today on which he will expound during the webinar:
- China’s debt is about $36 trillion yuan (or $5.68 trillion USD). This number is astronomical considering that it is just a little more than one-third of the U.S. total debt, but the difference between the U.S. and China is that the U.S. national income per capita is $47,140, whereas China’s national income per capita is $4,260 – not even one-tenth of the U.S. amount. To be on par with the U.S., China’s total debt should be around $1.5 trillion USD, but it is three times that! Considering that the U.S. has an unsustainable debt position, China’s is ridiculously out of control and puts that country in extreme danger of a financial collapse of epic proportions.
- China’s officially published interest rate of 6.2 percent is fabricated. In reality China’s inflation is 16 percent. This is eerily similar to the United States as well. The U.S. official inflation of around 3 percent is nowhere close to unofficial inflation estimates of 10-13 percent. What does this mean for China? This means that cost of living, wages and cost of goods sold in China will have to rise, and instead of exporting deflation, China will be exporting higher priced goods, thus affecting the rest of the world that purchases its goods. The world is on the verge of an inflationary cycle like we have never seen. Additionally, central banks around the globe are printing money on a massive scale to try to stimulate liquidity and spending (this is the definition of inflation!). Add to this a rising price structure in China, the major exporter to the world, and we could be preparing for a global hyperinflation.
- Excess capacity in the economy and private consumption is only 30 percent of economic activity.
See also this report here which is more recent:
A debt crisis, not a liquidity crisis
“I think what people don’t really grasp is the extent to which this is not a liquidity crisis—it’s a debt crisis, so it’s not something that can go away,” says Anne Steveson-Yang, founder of Beijing-based J Capital Research. “They have a situation now where they’re running the whole economy on debt.”
What that means is that China’s massive stimulus from 2009 to 2011 sunk money into projects that are generating little or no returns. The continuing gush of credit allowed companies to paper over these losses by covering their bad debt with new loans. That combined with the fact that in the last two years, much of those loans haven’t appeared on bank balance sheets, and have instead been issued through shadow lending, has obscured the scale of China’s indebtedness. But whatever the size, it’s now big enough that the system needs colossal amounts of liquidity even to keep above water.
That $3.4 trillion in forex reserves? Irrelevant
UBS: China’s Growing Debt Problem
China has a huge debt problem, warn UBS analysts.
Chinese central government debt equaled 15 percent of the economy, and government debt including central and local governments and agencies equals 55 percent of the economy. All together, government, corporate and household debt amounts to over 200 percent of the nation’s gross domestic product.
“Should we worry about China’s debt problem?” asked UBS analysts in a research note, according to CNNMoney. “The answer to that question is a definitive yes.”