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China's Hidden Borrowing?

Filed in archive News on March 14, 2010

Suzhou: is most of China's debt local government debt?
© d'n'c


2point6billion (a blog on economic issue in India and China) had an interesting blog post not long ago on China's "hidden" borrowing.

Officially, China has a public debt hovering at about 22% of its GDP. That's relatively low. The US has a public debt that's about 94% of GDP and the UK's public debt is closer to 380% of GDP. But Victor Shih, an economist at Northwestern University, has suggested that most of China's public debt is somehow shuffled down to local governments and may be as high as 96% of GDP.

Shih thinks that local governments in China will start defaulting on their debt soon. And he things the results will be a massive economic slowdown that will come to be known as something like the Chinese Recession of 2012.

Me? I'm not so sure. China's economy is resilient. And it keeps geeting revived by US investors. Maybe 2012 will be the year of the Chinese recession, but I doubt it?

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Tags: China,  debt  china  news  creative  china+hidden  hidden+borrowing  public+debt 

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