China admits true debt levels

[KumarG]

Shadow banking is that which is off the books. You are just describing a few of the areas that lending goes into. You also forgot loan sharks which China has seen an alarming increase of broken hands lately.

Good God, sometimes I wonder why I even bother.

Off the books does not equate to Off B/S liabilities. The former is an unreported figure which could be practically any amount. The latter is an accounting treatment of the types of instruments and liabilities which are reported to the regulator and the taxman, albeit as supplementary notes. These are not necessarily "debt" and may include a lot of leverage inherent in certain derivatives. I would suggest reading up on the technicals before offering a counter.

That said, a part of off B/S liabilities can be quite risky, especially as the world found out in the case of contingent liabilities from CDOs in 2008. Depends on the market dynamics and systemic risks due to those.

In this case, we just don't know. The shadow banking sector is much more dangerous because that is true debt (loans), which need to be serviced.

 

[jadoogar]

i am weak in economics
can any one explain what it actually means?

The way I understand it (also check Michael Pettis blog on china financial markets):

Taking the $71 trillion figure at face value. That debt must be serviced - interest charges plus repayment or rollover of principal as it matures. If the debt has an average interest of 5% the Chinese economy must generate ~$3.5 trillion to service the interest on the debt. According to M Pettis that $3.5t is being borne by the household sector leading to depressed internal consumption and will ultimately result in an extended period of low growth.

Pettis recommends that the PRC take its medicine now, free the banking sector from forced loans to favored borrowers (SOE = State owned enterprises). Privatize the economy. Transfer ownership of SOEs etc to the population. If households have more money they will consume more leading over time to a more balanced internal consumption based economy.

 

[nimo_cn]

news like this serves as opium, some people needs it on daily basis.

 

[J20!]

news like this serves as opium, some people needs it on daily basis.

It's only "news" to people who don't understand what off-balance sheet liability is.

@Armand2REP will be foretelling the "collapse" of the PRC's economy till his dying day. He's been at it since 2009.

 

[Compersion]

I admire Israelites also the connection they have with India. Wonder how much of above can be linked to the copying and delineation from PRC towards Israel emergence.

https://www.huffingtonpost.com/joshua-gleis/never-underestimate-israe_b_1299891.html

(On purpose refer to Iran ... but there is a far wider analysis on PRC and Israel)

 

[no smoking]

It's only "news" to people who don't understand what off-balance sheet liability is.

Does he really not understand it? I doubt it. Anyone who read through the report can see there is another section talking about shadow bank.

@Armand2REP will be foretelling the "collapse" of the PRC's economy till his dying day. He's been at it since 2009.

Well, he is just simply telling what our Indian friends here want to hear. Otherwise, how do you think he gets his "chini expert" title?

 

[F-14B]

news like this serves as opium, some people needs it on daily basis.

you should now because at one time China used to the biggest consumer of the same

 

[Dovah]

Does he really not understand it? I doubt it. Anyone who read through the report can see there is another section talking about shadow bank.



Well, he is just simply telling what our Indian friends here want to hear. Otherwise, how do you think he gets his "chini expert" title?

That is a custom title that users give themselves. You could edit your's too.

 

[LETHALFORCE]

This means shadow banking sits at $37 trillion and on-sheet debt is $34 trillion for a grand total of...

$71 trillion or 900% of GDP

This is where the fake growth and numbers come from.

 

[LETHALFORCE]

http://www.businessinsider.com/chinese-debt-risk-to-financial-stability-2017-9

Chinese debt is so bad that even Chinese bankers now say it's a 'bubble'