Still climbing the ladder


China’s end-June ratio of debt to GDP, a widely-used parameter to measure macro leverage and economic health, rose to 249.5 per cent from 248.8 at the end of March and 243.7 at the end of 2018, according to new figures released by the Beijing-based National Institution for Finance and Development (NIFD) on Tuesday. Beijing has allowed its budget deficit to increase and authorised more local bond issuance this year to support the economy through investment, particularly in infrastructure. Even so, fixed asset investment grew only 5.7 per cent in the first seven months of the year, only slightly higher than the decades-low 5.6 per cent growth over the first five months. “Some sectors need to increase their leverage. This is defensive and would prevent a large decline in growth momentum that would have a [negative] influence on indicators like employment,” said Robin Xing, chief China economist at Morgan Stanley.

Climbing, climbing. When you get to the top of the ladder, what will you see?

One Response to “Still climbing the ladder”

  1. feeblemind Says:

    The Real “Helicopter Money”: Since 2009, China Has Created $21 Trillion Of New Money, More Than Double The US

    From the article:

    in an Op-Ed in the FT, Arthur Budaghyan, chief EM strategist at BCA Research writes about this all important topic of China’s “helicopter” money – which far more than the Fed, ECB and BOJ – has kept the world from sliding into a depression, and yet is blowing the world’s biggest asset bubble.

    Budaghyan picks up where we left off, and notes that over the past decade, Chinese banks have been on a credit and money creation binge, and have created RMB144Tn ($21Tn) of new money since 2009, more than twice the amount of money supply created in the US, the eurozone and Japan combined over the same period. In total, China’s money supply stands at Rmb192tn, equivalent to $28 TRILLION. Why does this matter? Because Chine money’s supply is the size of broad money supply in the US and the eurozone put together, yet China’s nominal GDP is only two-thirds that of the US.

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