The Phaserl


China defies IMF on mounting credit risk and need for urgent reform

If you think China’s Communist Party fully understands the mess it has created by ramping credit to 200pc of GDP and running the greatest investment bubble know to man, read its shockingly complacent response to warnings from the International Monetary Fund.

by Ambrose Evans-Pritchard, The Telegraph:

The IMF’s Article IV report on China states – as clearly as the IMF dares – that excess credit has been pushed to the outer limits of sanity, and that there is a growing risk of an “adverse feedback loop” as the financial system and the economy take each other down in a mutually reinforcing spiral.

As you can see from the first chart, total credit has jumped from 129pc to 195pc of GDP since 2008, and has completely departed from its historic trend. The great mistake, plainly, was to keep the foot on the floor in 2010 and 2011, long after the Lehman crisis had subsided.

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1 comment to China defies IMF on mounting credit risk and need for urgent reform

  • Rodster

    Every industrialized nation is doing this. When one of these top economies collapses from it’s debt levels it will create a domino effect as all these economies are interconnected due to global trade.

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