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Main » 2016 » October » 19 » When the pyramid collapses Chinese
When the pyramid collapses Chinese



Every fourth Chinese company can not pay its debts - ie It is on the verge of bankruptcy - Materials AMarkets.




China is faced with the problem head-on shortly after commodity prices collapsed in 2015. Even in 2015, economists were talking about Chinese corporate issues and the inability to generate stable cash flow to cover all its liabilities. Problems with this are at companies in all sectors. Not only in a segment material. Companies are trying to survive and are working on pyramid schemes - ie take new loans to pay for their old loans. Thus, the debts are growing, profits continue to fall. In terms of corporate sector debt, China ranks first in the world. This is 300% of GDP, and the historical record.


Schedule - the ratio of debt to GDP dynamics:



Giant stream of bankruptcies in the corporate sector of China is not simply because the decision-making procedure in Beijing asking the financial sector to support the real sector. Banks extend credit lines. And on a serious time. The Japanese experience suggests that the transfer of leverage for years to come - a tactic fraught with a lot of trouble in the future. In Japan, economic growth? What could be there.

Additional burdening - the fact that many large companies in China - companies with state capital share. They are, in principle, are less effective. Their chances of survival of the natural and the natural growth is very small.Debt kills last hope. State-owned companies are kept afloat, almost like a zombie - neither alive nor dead. The private sector is small, but with ideas, can not develop. Just because of the dominance of zombies here. And it is interesting that the authorities actively falsify statistical data showing statistics for non-performing loans. Past pessimistic reports are forgotten - analysts write that, say, the number of bad loans is stable. Although until quite recently wrote that the catastrophically high and will continue to grow. In connection with all this it is no wonder the minimum number of defaults. According to Goldman Sachs, the last three months, only one Chinese firm filed for bankruptcy on corporate bonds. was about ten in the first half of the year the number of such companies.


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