Author: UYA

China thinks long-term on financial stability — so should we   [Copy link] 中文

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Post time 2018-7-23 20:20:09 |Display all floors
The OP addresses the difference in China vs America debt.


Yes, but she fails to address the reasons for those differences. Reasons that arise from completely different political systems.

China absolutely needs to succeed economically, because otherwise the whole country will go down with it's single leadership. USA does not need to succeed in similar fashion. Political losses that possible economic disasters could bring (and have brought in past), are limited to current (or few subsequent) administrations. In China it's all or nothing, politically.

"Household debt in the U.S. is also high by historical standards, representing 78.7% of GDP, compared to 48.4% in China."

On that detail alone, she fails to note that in USA households do not only buy property and appliances, but also the land that their properties sit on. In China nobody buys land, as it is owned by state and rural collectives, and only leased temporarily.

The structure of household ownership is therefore very difrerent, which converts to different cost and debt structure.

Owning your home, and not just the roof over your head, is more valuable to most Americans than for most Chinese. Such values come with a century of growth, and not just two decades.

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Post time 2018-7-24 08:30:47 |Display all floors
Boston101 Post time: 2018-7-23 20:15
China’s $14 trillion debt-ridden economy

You are confused.
China debt is at 5 trillion.
While US debt is at 23 trillion.
(who is the King of debt?)

Another thing to note....
China debt divided by the population is much smaller.
America debt divided by the population is way higher.
Would rather have a China dept vs American

Another note....
China holds 2 trillion of US debt.
So that cuts China debt by almost half.

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Post time 2018-7-24 08:32:18 |Display all floors
Boston101 Post time: 2018-7-23 20:17
- Nearly 20 percent of China's exports go to the U.S.
-If a trade war ensues with the U.S., China's  ...

Your stats just show how much need the US has for China goods.
Not the other way around.
If things heat up....
Americans will be in the streets rioting.

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Post time 2018-7-27 14:11:55 |Display all floors
UYA Post time: 2018-7-24 08:30
You are confused.
China debt is at 5 trillion.
While US debt is at 23 trillion.
According to the Bank for International Settlements, China’s debt to GDP ratio reached 257 per cent in 2017, higher than the United States’ 152 per cent, and more than most emerging economies. The IMF anticipates that by 2020 China’s domestic credit to GDP ratio will rise to 300 per cent. In May, for the first time since 1998, Moody’s Investors Service downgraded China’s sovereign credit rating.

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Post time 2018-7-27 14:13:04 |Display all floors
UYA Post time: 2018-7-24 08:32
Your stats just show how much need the US has for China goods.
Not the other way around.
If things ...

Who's going to buy Chinese goods when the tariffs kick in? No one in the US, that's for sure.

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Post time 2018-7-27 22:24:34 |Display all floors
My limited understanding of economics details is obvious. However, my general stance is that consumer demand is responsible for about 70% of economic growth. So I'm a Keynesian demand-side adherent. It's through debt (consumer, business and government) that effective demand increases. The burden of payments on the debt should not be so great as to decrease demand of course. The higher growth rate of newly-developing economies (like China) is bound to be higher than more-fully-developed economies )like the USA). Early development (from a lower base) is faster. There is also the problem in capitalism where long-term decisions are often replaced by shorter-term decisions due to the focus on short-term earnings of equity by shareholders and managers (seeking annual bonuses).
What's on your mind...

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Post time 2018-7-28 07:45:37 |Display all floors
Ted180 Post time: 2018-7-27 22:24
My limited understanding of economics details is obvious. However, my general stance is that consume ...

China is not a developing country. It has the second largest economy in the world.

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