China’s rising debt pile constrains new economic stimulus, Michael Pettis notes - Traders Union
China’s rising debt pile constrains new economic stimulus, Michael Pettis notes - Traders Union
Source: Traders Union
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DW NOTE
China ran a debt-to-GDP ratio of 288% last time anyone checked, with local governments carrying another ¥66 trillion in hidden liabilities. Pettis is stating the obvious: you cannot stimulus your way out of a debt trap when the trap is the stimulus. Beijing's choice now is between a property collapse it refuses to clear and a bond market it cannot afford to defend — it will likely choose both halfway and get neither solved.