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"China's chief auditor has warned that high levels of local government debt could derail the country's economy, with some observers suggesting that a number of Chinese provinces are even more fiscally-troubled than Greece.

"Mr Liu said the ratio of debt to disposable revenues at some local governments was over 100pc and in the highest case it was 365pc.

He said the audited debts of 18 of China's 22 provinces, together with 16 cities and 36 counties amounted to 2.79 trillion yuan (£279bn) in 2009.

Several observers believe the situation is far worse. The China Daily newspaper, which is run by the government, suggested that the total sum could add up to between 6 trillion and 11 trillion yuan (£590bn-£1.08 trillion)."

http://www.telegraph.co.uk/fin...risk-to-economy.html

I've warned of this condition for quite a time. This is the first time I've read a quantification of the problem. Economist expect a boil over by 2012.

Economists also warn of their bubble economy busting in a year or less. A couple of interesting facts. US GDP is about $14 trillion annually. China's GDP is about $4.5 trillion annually. The Chinese government and corporate entities hold about $850 to $880 billion in US treasuries. Very soon, China will not be able to buy more debt. The next large holder of US debt is Japan. As their population ages first, the treasuries will be cashed in to fund retirements. China's population gets old next, and there will be one married couple to support four parents and even more grandparents.

Strap in folks, its going to a bumpy ride. Might want to put on the crash helmet, as well.
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