China’s Credit Overdose
Despite rapid credit expansion in the last two years, China's GDP growth has decelerated sharply. This disparity reflects the accumulation of massive debts, which require an ever-increasing amount of liquidity to service.
Despite rapid credit expansion in the last two years, China's GDP growth has decelerated sharply. This disparity reflects the accumulation of massive debts, which require an ever-increasing amount of liquidity to service.
SHANGHAI – The days of double-digit economic growth in China are over. Indeed, the annual growth rate, which has been lingering at about 7.5% since 2012, is predicted to fall to 7% this year – and is likely to go lower. This is China’s “new normal,” characterized, according to China’s leaders, by “medium-to-high-speed” (instead of high-speed) growth. But perhaps even this is optimistic.