As I commented on before, China is the most totally indebted nation, globally. The US comes in third or fourth, depending on measurements -- lucky us!
Much if China's debt is internal due to corruption in national, provincial and local governments --all controlled by the communist party, of course. Like the moribund Japanese economy, China isn't closing zombie banks. Plus, they aren't closing zombie companies, either. Japan allowed those to close thru bankruptcy, like most capitalist economies. As many of the losing companies in China are government or party owned, they are allowed to stagger on, sucking up funds for no return.
"China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’s top financial watchdog.
A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.
The Bank for International Settlements warned in its quarterly report that China’s "credit to GDP gap" has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia's speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.
Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring. The credit to GDP gap measures deviations from normal patterns within any one country and therefore strips out cultural differences.
It is based on work the US economist Hyman Minsky and has proved to be the best single gauge of banking risk, although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line.
China’s total credit reached 255pc of GDP at the end of last year, a jump of 107 percentage points over eight years. This is an extremely high level for a developing economy and is still rising fast .
Outstanding loans have reached $28 trillion, as much as the commercial banking systems of the US and Japan combined. The scale is enough to threaten a worldwide shock if China ever loses control. Corporate debt alone has reached 171pc of GDP, and it is this that is keeping global regulators awake at night."
http://www.telegraph.co.uk/bus...ing-crisis-in-china/
This explains China's belligerence towards other nations -- typically used to deflect populations from their own problems. Also, the new government push not only against Falun Gong, but small Christian churches, as well. In their not so distant past, religions have been the downfall of Chinese governments -- the Boxer Rebellion and the Taiping Rebellion led by Jesus Christ's little brother (in his mind).
Its going to be an interesting ride -- buckle up, kiddies.
