Posted on 12/07/2019 11:37:58 AM PST by SeekAndFind
If Chinas bad debts were written down, its economic growth rate would be half the recorded number, a US economist at a prominent Chinese university has warned.
In a speech in Shanghai this week, Michael Pettis, professor of finance at Peking University, warned that Chinas debt is closely linked to the governments perceived overstatement of its gross domestic product (GDP).
The government is accused of perpetuating the existence of zombie companies, by granting loss-making companies loans. Banks in turn treat these companies as creditworthy, whereas in reality they should be written off as bad debt, Pettis said.
If you believe there is bad debt that has not been sufficiently written down, you must believe that Chinas GDP is overstated, relative to what it would be in any other country. That must be true, Pettis said.
If we are able to calculate GDP correctly, it would probably be half of the recorded number.
In December, Xiang Songzuo, an outspoken professor from the Renmin University of China, who previously served as chief economist for Agricultural Bank of China, cited unidentified internal reports as saying that said Chinas GDP growth for 2018 could be 1.67 per cent or even negative, a far cry from the official figures.
Furthermore, a group of four economists published a paper this week arguing that China might have overstated its annual growth rate by 2 percentage points on average from 2008 to 2016.
Chinas official statistics agency said the countrys economic growth rate was 6.6 per cent in 2018. The Chinese government said it would try to achieve an economic growth rate between 6.0 to 6.5 per cent in 2019, a moderate slowdown from previous years, but nevertheless a much faster rate compared with other major economies.
(Excerpt) Read more at scmp.com ...
RE: If Chinas bad debts were written down, its economic growth rate would be half the recorded number
OK, here’s the question, if America’s bad debt were similarly written down, what would be our recorded economic growth?
Do we or do we not have bad debts?
That’s not a surprise. In most years, the reported GDP growth reported by each Province is well above that reported by the central government. How is it possible each Province could be above average?
Bureaucratic fakery is the norm in all communist countries.
Unexpected®
The same lies were told about the Soviet Union.
I don’t see how they don’t get ‘free’ money out of this, if the oversight authority (ChinaGov) is in on the scam.
They create a bank with zero assets. That bank then makes billions in loans, creating a negative balance in the bank. Remember, the oversight is in on the scam, so there’s nothing stopping them from going so negative. Gov then closes the bank. Those negative balances are simply closed/erased. The ‘losses’ are to a non-entity that didn’t have anything to lose anyway, so no one lost any money. All the loanees actually received/have/already spent the money, but don’t owe anything back to the bank since it’s closed.
Bam. Free $$$
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