World News Insights
1-3 Minute Gist
Search, personalize, or simply browse. Follow the world around you from gist and context to insights.
Who we are | Our Credo | Ways of using Lyrarc | FAQ | Send Feedback | First Letter From the Editor
Sign up. It's free and easy to use
Create an account
to personalize your feed of articles and topics.
All Topics Article
A Warning on China Seems Prescient
Keywords:
Tags:
Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries.
Kenneth Rogoff on the financial crisis in China with debt exceeding 270% of GDP, shadow banking, real estate bubble and unsustainable local government finances
08/24/2015
Kenneth Rogoff of Harvard, is an expert on financial and debt crises, with the most extensive quantitative study of debt crises of 66 countries with Carmen Reinhart. The research is published in the book, "This Time Is Different." He discusses the debt crisis in China with the NYT's Andrew Ross Sorkin, saying China is not immune to the problems from an alarming buildup of debt. He says the reason China was seen as impervious to debt problems is because of the high savings rate of 30%, the millions of migrants moving to cities for manufacturing work, and government control of markets. Actually he sees China as a really good example of "This Time Is Different," the notion that somehow it can't happen here. The result is along delay before an event and the sudden speed of the implosion once it hits. The effects Rogoff sees are the risks to commodity producing countries such as Russia, Brazil, and other countries dependent on exports. He says China's large foreign exchange reserves offers a way for it to manage the debt crisis.
Grouped Articles
A Warning on China Seems Prescient
New York Times 08/24/2015
China facing full-blown banking crisis, world's top financial watchdog warns
The Telegraph 09/19/2016
Will Trump herald a US economic boom?
The Guardian 12/07/2016
China’s Economy Grows 6.9%, but Warning Signs Persist
The New York Times 04/17/2017
Moody’s Cuts Its China Rating for the First Time Since 1989
WSJ 05/24/2017
In Downgraded China, Echoes of Japan’s Boom and Bust
WSJ 05/24/2017
China's big problem in 2015- 8000 local government financing vehicles running up debt even when about half of borrowing goes to rollover old loans
01/28/2015
As the debt is run up it takes more units of borrowing to create one unit of investment. Over 4 units of borrowing in 2015 compared to less than 2 units of borowing before 2007, is what it now takes to create one unit of investment, according to JP Morgan. Where this adds to the glut in building or if its just a pet project or dream of city mayors the productivity of the investment is much lower, with additional risks in borrowing. And the collateral to support it of land sales is now increasingly unreliable with developers making cuts as property markets are slowing. The central government fearing slowing growth is pushing problems down the road, say experts. The IMF estimates that local government debt will reach 56% of GDP by 2019. The danger is that this will depress China's growth to below 5-6% in coming years witht a lot of the new borrowing simply going to rollover old loans, a situation Japan faced in the 1990's when the expression zombie loans was coined. This has implications for major manufacturing exporters Germany, Japan, the U.S., and for commodity exporters Australia, Canada, Brazil, S. Africa, Chile, which may look to India, Indonesia and other developing countries for exports.
Grouped Articles
Debt That Once Boosted Its Cities Now Burdens China
Wall Street Journal 01/28/2015
China’s First-Quarter Growth Slowest in Six Years at 7%
Wall Street Journal 04/15/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
China facing full-blown banking crisis, world's top financial watchdog warns
The Telegraph 09/19/2016
China’s Economy Grows 6.9%, but Warning Signs Persist
The New York Times 04/17/2017
Moody’s Cuts Its China Rating for the First Time Since 1989
WSJ 05/24/2017
China's local government debt poses a risk for the economy
06/17/2010
China's local government debt is estimated to be in the range of 27% to 42% of GDP. Loans by banks to local government financing vehicles face high risk of default.
Grouped Articles
Asia Goes on a Debt Binge as Much of World Sobers Up
Wall Street Journal 05/24/2013
China's 'Shadow Banks' Fan Debt-Bubble Fears
Wall Street Journal 06/24/2013
China's Silver Linings Playbook
Wall Street Journal 06/24/2013
I.M.F. Tells China of Urgent Need for Economic Change
New York Times 07/17/2013
China's Credit Levels Echo U.S. Crisis
Wall Street Journal 09/08/2013
China Think Tank Offers Reform Wish List
Wall Street Journal 10/30/2013
Fitch Ratings analyst Charlene Chu's analysis of China's shadow banking and unreported private debt
08/01/2010
CHina's private debt is over twice China's GDP according to Fitch Ratings analyst Charlene Chu
Grouped Articles
Charlene Chu Is the 'Rock Star' of Chinese Debt Analysis
Wall Street Journal 08/22/2013
China's Credit Levels Echo U.S. Crisis
Wall Street Journal 09/08/2013
Heard on the Street: Shadow Boxing With Risk at Chinese Banks
Wall Street Journal 09/22/2013
China Think Tank Offers Reform Wish List
Wall Street Journal 10/30/2013
Chinaâs Real Estate Boom and Conflicting Policy
New York Times 08/01/2010
Xi Faces Test Over China's Local Debt
Wall Street Journal 12/31/2013
China's Debt crisis
07/29/2010
The debt of local governments estimated at between 27% of GDP by Dragonomics and the China's National Audit Office, to a much larger 42% by Prof. Shih of Northwestern University.
Grouped Articles
Asia Goes on a Debt Binge as Much of World Sobers Up
Wall Street Journal 05/24/2013
China's 'Shadow Banks' Fan Debt-Bubble Fears
Wall Street Journal 06/24/2013
China's Silver Linings Playbook
Wall Street Journal 06/24/2013
Wall Street Journal 06/25/2013
Central Bankers Hone Tools to Pop Bubbles
Wall Street Journal 07/08/2013
Charlene Chu Is the 'Rock Star' of Chinese Debt Analysis
Wall Street Journal 08/22/2013
Krugman on China, "shadow banking," bubble in housing and construction, and shrinking role of consumer spending in GDP growth
04/14/2010
Krugman says China's economic planners are no better then planners in the U.S. and Europe who failed to take action against the housing bubble.
Grouped Articles
New York Times 12/18/2011
BusinessWeek 04/14/2010
Charlene Chu Is the 'Rock Star' of Chinese Debt Analysis
Wall Street Journal 08/22/2013
New York Times 08/22/2013
China's Credit Levels Echo U.S. Crisis
Wall Street Journal 09/08/2013
Heard on the Street: Shadow Boxing With Risk at Chinese Banks
Wall Street Journal 09/22/2013
The views of Derek Scissors and other experts on China's economic prospects after 2010.
01/07/2010
The likelihood that the economy will stall without change. The declining effect of large stimulus and fixed investment in producing growth. The interests of state-owned companies in continuing with the current system.
Grouped Articles
U.S. Stocks Shrug at China's Woes
Wall Street Journal 07/10/2013
New York Times 12/18/2011
China's banks: Great Wall Street
Economist 07/10/2010
Banyan: Afloat on a Chinese tide
Economist 09/02/2010
Xi Faces Test Over China's Local Debt
Wall Street Journal 12/31/2013
Chinese debt: The great hole of China
Economist 10/17/2014
Problems facing the China Bank Regulatory Authority (CBRC) for off-balance sheet lending and shadow banks
06/17/2010
Grouped Articles
China's 'Shadow Banks' Fan Debt-Bubble Fears
Wall Street Journal 06/24/2013
China's Silver Linings Playbook
Wall Street Journal 06/24/2013
Wall Street Journal 06/25/2013
China Central Bank Warns Banks on Liquidity
Wall Street Journal 06/25/2013
Credit Warnings Offer World a Peek Into Chinaâs Secretive Banks
New York Times 06/24/2013
Distress Signs Test Beijing's Resolve
Wall Street Journal 06/25/2013
The role of "loan guarantee chains" in fueling China's credit bubble and the surge in bad loans in 2014-2015
11/24/2014
Experts says what is unusual in China is that the loan guarantees for one firm are given by other firms in different industries. One defaulting textile firm had its loan guranteed by a machinery maker and a paper maker. The result is it creates problems for all of the firms. The other problem aspect of this arrangement is that banks evaluated credit risk by using these loan guarantees as evidence of creditworthiness. Till 2012 with no slowdown in growth in sight no questions were asked. With the slowdown in 2014-2015 this means a surge in bad loans in China's banking system unlike what it has experienced before, as continued high pace of growth can no longer be relied on to cushion the banking system from the risks.
Grouped Articles
Loan ‘Guarantee Chains’ in China Prove Flimsy
Wall Street Journal 11/24/2014
Economist 07/04/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
China’s Banks Face Worst Year in Over a Decade
Wall Street Journal 08/28/2015
Overheard: One ‘Best-Case’ Scenario for China’s Banks Is Pretty Bad
Wall Street Journal 09/17/2015
Trade Fight With U.S. Complicates China’s Campaign to Contain Debt
WSJ 06/19/2018
Bad loans at China's banks, especially smaller banks that make up a third of the banking sector, in 2015
07/04/2015
Grouped Articles
Economist 07/04/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
China’s Banks Face Worst Year in Over a Decade
Wall Street Journal 08/28/2015
Overheard: One ‘Best-Case’ Scenario for China’s Banks Is Pretty Bad
Wall Street Journal 09/17/2015
China’s Banks Are Hiding More Than $2 Trillion in Loans
WSJ 12/07/2016
Trade Fight With U.S. Complicates China’s Campaign to Contain Debt
WSJ 06/19/2018
China's $586 billion 2008 Stimulus package and the resulting debt overhang that the Jinping administration hoped to ease through the equity market
07/09/2015
The effort appears to have failed leaving companies as dependent as before on the bank loans. The surge
Grouped Articles
China’s Stock-Market Woes Trace Roots to Earlier Stimulus
Wall Street Journal 07/09/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
China facing full-blown banking crisis, world's top financial watchdog warns
The Telegraph 09/19/2016
Moody’s Cuts Its China Rating for the First Time Since 1989
WSJ 05/24/2017
China's debt situation in 2014 with total debt to GDP of 250%, and the risks to the economy
10/17/2014
Grouped Articles
Chinese debt: The great hole of China
Economist 10/17/2014
The End of China’s Economic Miracle?
Wall Street Journal 11/24/2014
China Lowers Growth Target to About 7%
Wall Street Journal 03/05/2015
China’s Stock-Market Boom Won’t Erase Bad Debts
Wall Street Journal 05/13/2015
China’s Economy Not Immune to Market Sickness
Wall Street Journal 06/30/2015
Devaluation Hints at China’s Rising Distress Over Economy
New York Times 08/12/2015
Build transfer transactions accounting for 40% of the 67% growth in China's local government debt for 2010-2013
05/19/2014
The rapid growth of build transfer transactions which are not properly regulated and now account for 16% of local government debt from 10% in 2010. The conncection between local government debt, shadow banking and housing construction in China.
Grouped Articles
China's Debt Risks Come to Fore in Housing Project
Wall Street Journal 05/19/2014
Chinese debt: The great hole of China
Economist 10/17/2014
China’s Shadow-Banking Boom Is Over
Wall Street Journal 12/24/2014
Debt That Once Boosted Its Cities Now Burdens China
Wall Street Journal 01/28/2015
Economist 07/04/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
Xiao Wang, chairman, China Securities Regulatory Commission, March 2013 -
07/08/2015
Wang is former head of the Bank of China, one of four large state owned banks. A WSJ report shows that under Wang as CEO of the bank in 2009 it was the least profitable and the most likely to ramp up lending at the government's request. As a savy politician he was appointed to the Party Central Committee in 2012 and to the position at the regulatory body in March 2013. In efforts to meet party directions Wang has moved in conflicting directions, clamping down on margin financing and as the market selloff worsened even loosened restrictions for loans on homes to invest in the market. The huge surge in the market and the Shanghai and Shenzen stock exchanges is now followed by a selloff in July 2015, which the government has no experince in handling following China's experiment with its own state oriented form of capitalism since 1990. The government plans to allow state owned enterprises with large debt to reduce the debt by investing in a surging market may be based on an erroneous assumption on how equity markets work. Lack of prior experience with equity markets on the downside is another handicap in China.
Grouped Articles
The Man Tasked With Stopping China’s Stock Selloff
Wall Street Journal 07/08/2015
Beijing’s Response to Stock Selloff Reveals Deep Insecurity
Wall Street Journal 07/08/2015
Why China’s Stock Market Bailout Just Might Work
New York Times 07/09/2015
Memo to China: Your Market Moves Are Doomed to Fail
Wall Street Journal 07/10/2015
Cooling of China’s Stock Market Dents Major Driver of Economic Growth
New York Times 07/15/2015
Wall Street Journal 07/28/2015
Reinhart and Rogoff on the lessons from other financial crises for the global financial crisis of 2008- it takes about 7 years to recover completely
02/03/2009
Grouped Articles
What Other Financial Crises Tell Us
Wall Street Journal 02/03/2009
In Japan’s Stagnant Decade, Cautionary Tales for America
New York Times 02/13/2009
New York Times 03/01/2009
How Righteousness Killed the World Economy
New York Times 10/12/2014
A Grecian Formula for Courting Disaster
Wall Street Journal 07/07/2015
A Warning on China Seems Prescient
New York Times 08/24/2015
Krugman on economic policy and prospects for China in 2012-2013
09/30/2010
Grouped Articles
The Slowing of Two Economic Giants
New York Times 07/14/2013
New York Times 09/30/2010
Chinese debt: The great hole of China
Economist 10/17/2014
A Warning on China Seems Prescient
New York Times 08/24/2015
China's Debt: You'll Grow Out of It
Wall Street Journal 01/25/2012
China Speeds Economic 'Transformation'
Wall Street Journal 03/06/2012
China, debt, credit ratings and borrowing costs
01/06/2014
Grouped Articles
China Five-Year Government-Bond Yield Hits 16-Year High
Wall Street Journal 01/06/2014
A Warning on China Seems Prescient
New York Times 08/24/2015
In Downgraded China, Echoes of Japan’s Boom and Bust
WSJ 05/24/2017
WSJ's series on China's banks in 2014- "Rising Risks"
12/27/2013
Grouped Articles
China Banks Keep the Fees Flowing
Wall Street Journal 12/27/2013
Xi Faces Test Over China's Local Debt
Wall Street Journal 12/31/2013
Regulators at Odds on Reining In China's Shadow Lending
Wall Street Journal 01/15/2014
Wall Street Journal 08/18/2014
China's Moment of Truth: Financial Reform or Growth?
Wall Street Journal 09/16/2014
Profit Growth Is Slowing at China’s Biggest Banks
Wall Street Journal 10/30/2014
Off-balance sheet shadow lending by Chinese banks.
01/12/2010
Even after the efforts to restrain lending in 2010 in China following heightened stimulus lending in 2009, the level of bank lending has exceeded 10.5 trillion yuan and is at the same level as 2009. This includes the lending through trusts and other mechanisms according to Fitch Ratings. This explains the inflationary pressures and property bubble.
Grouped Articles
Asia Goes on a Debt Binge as Much of World Sobers Up
Wall Street Journal 05/24/2013
China's 'Shadow Banks' Fan Debt-Bubble Fears
Wall Street Journal 06/24/2013
China's Silver Linings Playbook
Wall Street Journal 06/24/2013
Wall Street Journal 06/25/2013
China Central Bank Warns Banks on Liquidity
Wall Street Journal 06/25/2013
Credit Warnings Offer World a Peek Into Chinaâs Secretive Banks
New York Times 06/24/2013
China's debt at over 250% of GDP and the financial crisis in 2015- Harvard Prof. Rogoff and former Treasury Secretary Paulson on the reckoning with debt issues
04/20/2015
Linked Articles
A Warning on China Seems Prescient
New York Times 08/24/2015
A Veteran of the Financial Crisis Tells China to Be Wary
New York Times 04/20/2015
We took a different way to help millions around the world build educated informed mindsets that affects and shapes their lives. For a future that is open, global and digital, with everyone having access to high quality information. We believe in the renewal of America, renewal of Europe, the renewal of India, the rest of Asia, Latin America and Africa. The renewal of our supply chains, health, education, infrastructure, as we rebuild our countries after the pandemic. Literacy and knowledge we believe cannot thrive and grow in a world of web bots, web crawlers, or AI. This requires human curiosity, human learning, and human imagination. We take as inspiration the saying- “One has to be free, and as broad as sky. One has to have a mind that is crystal clear, only then can truth shine in it.” Every contribution whether big or small is precious- in this crisis and ahead.
Support Lyrarc from as small as $1
Terms and Conditions | Copyright Policy | Privacy Policy | Contact Us
