China debt grows to $4.6 trillion

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Flesh Thorn
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China debt grows to $4.6 trillion

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The world's second-largest economy has been struggling to arrest local government debt -- the result of easy credit and round after round of stimulus.
While it's hard to gauge the scale of the problem, a recent government think tank report may shed some light. The Chinese Academy of Social Sciences estimates local government debt reached 19.94 trillion yuan ($3.3 trillion) by the end of 2012. Local government debt accounts for most of total government debt, which is expected to have hit 27.7 trillion yuan ($4.56 trillion), or roughly 53% GD
The report puts local debt at double what it was three years ago, when China last conducted a nationwide debt audit. Results of the most recent government debt audit, launched in July, haven't been released.

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Re: China debt grows to $4.6 trillion

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DEBT: The US Vs. China

Heightened volatility in China's short-term interest rates has some people worried that the world's second largest economy is doomed for a credit crisis.

For a discussion on this, check out our Q&A with Patrick Chovanec.

Generally speaking, economists think that China's financial risks are contained, yet they also warn it's something to keep an eye on.

Here's Wells Fargo Securities' quick summary of all the debt in China:

Does China have a debt problem? The answer would appear to be “no” when analyzing the Chinese household and central government (i.e., Beijing) sectors where the debt-to-GDP ratios at present are only 30 percent and 15 percent, respectively. Comparable ratios in the United States are 80 percent and 70 percent, respectively. However, the debt-to-GDP ratio of the Chinese business sector is 140 percent, whereas its American counterpart stands at 80 percent. Although there are few visible signs of financial stress in the Chinese business sector at present, further increases in leverage could eventually spell trouble. Stay tuned.

"Our caution regarding the Chinese debt situation would become more elevated in the future if we see rapid credit growth in conjunction with slow economic growth," wrote Wells Fargo's Jay Bryson.

Read more: http://www.businessinsider.com/outstand ... z2oau0OY3f
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Re: China debt grows to $4.6 trillion

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They'll get there soon enough. We did. And everyone knows the Chinese can do anything we can faster and cheaper... :roll:
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Re: China debt grows to $4.6 trillion

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Those aircraft carriers don't come cheap neither...
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