China admits true debt levels

[Armand2REP]

The off-balance sheet business continued expansion, while the embedded risks remained. At end-2016, the outstanding balance of the off-balance sheet of banking institutions (including entrusted loans and entrusted investments) registered RMB 253.52 trillion yuan. The outstanding balance accounted for 109.16 percent of the total balance sheet assets,

See page 48
http://www.pbc.gov.cn/english/130721/3390064/2017092716540370024.pdf

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

 

[KumarG]

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

Not quite, mate. Off B/S liabilities are usually derivatives and contingent liabilities which are quite transparently reported. These are not "debt" in real sense, but more a measure of the depth of some of the derivs market.

Shadow banking debt is that which is not reported at all.

P.S. Off bs liabilities can be risky though, so must be included in measures of risk management.

 

[sorcerer]

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

BUBBLE ABOUT TO BURST ANY TIME!!!
Wondering when the FDIs to china cease and route to India,now the system has slimmed down ..
Interesting days ahead at Dalal Street!

 

[square]

i had been writting it since long...
they are in troble...

china is issuing such advisories out of frustration...their import rising , export dipping......trillions of dollor they landed to their exporters are in danger of being non-performing......their banks are in troble...

 

[Armand2REP]

Not quite, mate. Off B/S liabilities are usually derivatives and contingent liabilities which are quite transparently reported. These are not "debt" in real sense, but more a measure of the depth of some of the derivs market.

Shadow banking debt is that which is not reported at all.

P.S. Off bs liabilities can be risky though, so must be included in measures of risk management.

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.

 

[binayak95]

Hope this results in a rather rapid downgrading of the Chinese economy from rating agencies. But given that these are the same agencies which sold absolute BS from Morgan Stanley and Standard Chattered before the 2008 crisis, ain't holding my breath.

On the other hand, wonder if this isn't a dangerous thing for the world.

A country in economic freefall will seek to divert the attention of its people (especially if the people have restricted access to free media). And we know what that means: "Uncle Sam is the capitalist devil!! India is the greatest risk to Chinese sovereignty!!"

 

[Armand2REP]

Hope this results in a rather rapid downgrading of the Chinese economy from rating agencies. But given that these are the same agencies which sold absolute BS from Morgan Stanley and Standard Chattered before the 2008 crisis, ain't holding my breath.

On the other hand, wonder if this isn't a dangerous thing for the world.

A country in economic freefall will seek to divert the attention of its people (especially if the people have restricted access to free media). And we know what that means: "Uncle Sam is the capitalist devil!! India is the greatest risk to Chinese sovereignty!!"

Uncle Sam has serious debt, but check it compared to Chinese who have sold their sovereignty to debt collectors.

 

[Armand2REP]

China is so desperate to track down dead-beat borrowers they are creating a most wanted list.

Those who fail to repay a bank loan will be blacklisted, and they will have their name, ID number, photograph, home address and the amount they owe published or announced through various channels – including in newspapers, online, on radio and television, and on screens in buses and public lifts.

http://www.scmp.com/news/china/econ...onal-name-and-shame-system-deadbeat-borrowers

 

[Razor]

If and when the bubble bursts; will it not have an effect on the global system too???
How exposed are we to that???

 

[Screambowl]

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

 

[Indibomber]

This sounds like a mess, global recession and war on the cards. When a BIG tree falls wala dialoue..
I hope #Modi plays his cards right and use this opportunity well.

 

[Razor]

This sounds like a mess, global recession and war on the cards. When a BIG tree falls wala dialoue..
I hope #Modi plays his cards right and use this opportunity well.

Should I pull the money out of stocks??

 

[indiatester]

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

Same here. But let me take an attempt.
If they have 900% their GDP as debt, thats like me having 9x my annual salary as my loan amount. Generally we don't get beyond 4-5x for our loans and thats with us not having any liabilities.
For any country that generally runs on deficit budget, meeting the liabilities is going to be tough.
However we are ignoring the assets China has. IIRC, they have a pretty big investment in USD to the tune of 1.1x trillion!
Hope they have other assets too to cover for the $71 trillion debt.
Very highly leveraged IMO. But thats what some have been saying for a while and China has been doing pretty fine thankfully. I don't want any global slowdown anytime soon.

 

[Sakal Gharelu Ustad]

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.

Assets are always more than GDP. I dont know how this graph shows anything. (I can have 100k income/year but 1 million of assets).

By default for a banking institute assets=liability. They dont own anything. They have creditors and debitors.

 

[Screambowl]

Same here. But let me take an attempt.
If they have 900% their GDP as debt, thats like me having 9x my annual salary as my loan amount. Generally we don't get beyond 4-5x for our loans and thats with us not having any liabilities.
For any country that generally runs on deficit budget, meeting the liabilities is going to be tough.
However we are ignoring the assets China has. IIRC, they have a pretty big investment in USD to the tune of 1.1x trillion!
Hope they have other assets too to cover for the $71 trillion debt.
Very highly leveraged IMO. But thats what some have been saying for a while and China has been doing pretty fine thankfully. I don't want any global slowdown anytime soon.

How would be american debt on china?
............................................................

 

[sthf]

Damn!!!!

@Armand2REP Isn't most of China's debt local and not international? What are consequences of having a huge local debt?

Economic illiterate here.

 

[indiatester]

How would be american debt on china?
............................................................

Basically USA owes $1.1x trillion to China because China bought US treasury bonds. Think of it as fixed deposit China made with US and US has to pay it back when the bonds mature.

 

[Armand2REP]

If and when the bubble bursts; will it not have an effect on the global system too???
How exposed are we to that???

Indeed, the current global financial system has based its projections on a China that doesn't collapse under the weight of its own debt. Any markets that rely on China will be adversely affected. Commodity producers will be the hardest hit but all stocks across the board will see heavy drops from the shock. They may or may not rebound depending on how deeply the reliance on Chinese growth was factored into forecasts. The core of US investment portfolios (blue chips) will be wiped out: Apple, Boeing, Walmart, GE ect. Anyone who has relied on or planning to do business in China will fall. It will be a rude awakening when the world realizes that the 1 billion super consumers they were counting on aren't there and now know without a doubt will never be.

 

[Yggdrasil]

I don't really know why this surprises people. When you build massive highways going from nowhere to nowhere, ghost towns, and churn out steel in millions of tons that barely sells for its production costs, who is going to pay for it?

 

[Razor]

Indeed, the current global financial system has based its projections on a China that doesn't collapse under the weight of its own debt. Any markets that rely on China will be adversely affected. Commodity producers will be the hardest hit but all stocks across the board will see heavy drops from the shock. They may or may not rebound depending on how deeply the reliance on Chinese growth was factored into forecasts. The core of US investment portfolios (blue chips) will be wiped out: Apple, ........

This is all I need; I am happy with this.