China's increasing debt.

Author:Donnellon, Brian
Position::Economic News
 
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For several years, strong GDP growth figures have concealed China's high levels of debt, which threaten their economy as well as global economic stability. The significant increase in debt compared to the GDP is similar to the increase experienced by Japan and the U.S. before their financial turmoil. China has been described as a debt junkie, demanding more credit to maintain its growth.

A worrying economic event recently took place and went almost unreported. China had its first corporate-bond default. The Chinese allowed a small privately owned solar energy company, Shanghai Chaori, to go bust. The default is an example of China's increasing debt crisis because, although the default of USD 163 million is small compared with the USD 613 million of Lehman Brothers, it highlights a growing debt which is almost double China's GDP. It was reported that China's largest banks wrote-off double the level of bad...

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