China is rapidly approaching the point of maximum debt load in terms of sovereign and corporate loans and more reminiscent of the situation in America before the 2008 crisis - on AMarkets materials.
Private and China national debt grew to $ 26.6 trillion in 2015 - it is five times more than what it was 5 years ago. This is twice China's GDP. The traditional view of things is that the larger the debt, the closer to the point of crisis, when the country's authorities are no longer able to service the debt or when zakreditovannost rises to heaven the risks for the financial sector, and the onset of the crisis is a matter of a few months. There are many examples - America, Greece ...
In the case of China, most of the burden falls on the private sector. The largest companies in China (especially those that are state-owned) have created and continue to create much of the country's debt. Growing debt means that companies will have to earn more income to spend on interest payments and less on business expansion, recruitment of new people. It is a vicious circle devilish. The smaller the business, the worse for the economy as a whole. It is worth noting that all the intensity increases the percentage of bad loans in the Chinese corporate sector. less willing to lend to banks. Credit conditions tightened. The situation is complicated by the presence of a large-scale in size of the shadow banking sector. Predict the point of the collapse of the banking bubble becomes more difficult. According to estimates Goldman Sachs, about 40% of GDP produced by China - is the result produced by a new portion of the debt (new loans).
Schedule - debt / GDP dynamics in China:
Closer to the 2019 debt / GDP will be closer to 400%, if nothing fundamentally will not change. It is important to understand that many of the problems in China remain hidden from the eyes of the outside world due to the fact that most of China's major nationalized companies.
Chinese authorities certainly anticipating future challenges and, therefore, are bought gold on a gigantic scale.