Inflated Chinese business lending set to burst?

A hard landing could be on the horizon.

Well this isn't good. The Wall Street Journal has a story about the growing credit bubble in China. Dinny Mcmahon and Colum Murphy write:

Analysts at Standard Chartered PLC estimate that Chinese corporate debt was equivalent to 128% of gross domestic product by the end of 2012, up from 101% at the end of 2009. In a 2011 research paper, economists at the Bank for International Settlements found that when a country's corporate debt exceeds 90%, it becomes a drag on growth.

While accessible loans may be good news for China's struggling companies, it could be bad news down the road. Some economists worry such heavy debt in China's financial system could create serious problems for the economy if borrowers are unable to meet their obligations. Soured loans could ultimately force companies to consolidate—which could lead to politically unpalatable job losses—or force leaders into some sort of expensive bailout.

The news is yet more evidence that a significant proportion of China's growth could be illusory. Chinese infrastructure spending is notoriously wasteful, leading to the creation of ghost cities, collapsing bridges and impossible promises.

So much of the rest of the world's economy is based on Chinese growth remaining well about 5 per cent that the prospect of that not happening — a so-called "hard landing" — is usually held up as the third of the big economic disasters waiting to happen, after a US debt-ceiling default and a Eurozone breakup.

If the private economy is as unsustainably inflated as the state sector is, that hard landing is looking uncomfortably possible.

A Chinese labourer works at a saltern in Hami. Photograph: Getty

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Leave campaigners are doing down Britain's influence in Europe

As the third biggest country, Britain has huge clout in the EU.

Last week the Leave campaign's Priti Patel took to the airwaves to bang on about the perils of EU regulation, claiming it is doing untold damage to small businesses in the UK. Let's put aside for one minute the fact that eight in ten small firms actually want to stay in the EU because of the huge benefits it brings in terms of trade and investment. Or the fact that the EU has cut red tape by around a quarter in recent years and is committed to doing more. Because the really startling thing Patel said was that these rules come to us "without the British government having a say." That might be forgivable coming from an obscure backbencher or UKIP activist. But as a government minister, Priti Patel knows full well that the UK has a major influence over all EU legislation. Indeed, she sits round the table when EU laws are being agreed.

Don't take it from me, take it from Patel herself. Last August, in an official letter to the House of Lords on upcoming EU employment legislation, the minister boasted she had "worked closely with MEPs to influence the proposal and successfully protected and advanced our interests." And just a few months ago in February she told MPs that the government is engaging in EU negotiations "to ensure that the proposals reflect UK priorities." So either she's been duping the Parliament by exaggerating how much influence she has in Brussels. Or, as is perhaps more likely, she's trying to pull the wool over the British people's eyes and perpetuate a favourite myth of the eurosceptics: that the UK has no say over EU rules.

As the third biggest country, Britain has huge clout in Europe. We have the most votes in the EU Council alongside France, Germany and Italy, where we are on the winning side 87 per cent of the time. The UK also has a tenth of all MEPs and the chairs of three influential European Parliament committees (although admittedly UKIP and Tory sceptics do their best to turn their belief the UK has no influence in Europe into a self-fulfilling prophecy). UKIP MEPs aside, the Brits are widely respected by European counterparts for their common sense and expertise in areas like diplomacy, finance and defence. And to the horror of the French, it is English that has become the accepted lingua franca in the corridors of power in Brussels.

So it's no surprise that the UK has been the driving force behind some of the biggest developments in Europe in recent decades, including the creation of the single market and the enlargement of the EU to Eastern Europe. The UK has also led the way on scrapping mobile roaming charges from next year, and is now setting the agenda on EU proposals that will make it easier to trade online and to access online streaming services like BBC iPlayer or Netflix when travelling abroad. The irony is that the Europe of today which Eurosceptics love to hate is very much a British creation.

The Leave campaign like to deride anyone who warns of the risks of leaving the EU as "talking down Britain." But by denying the obvious, that the UK has a major role in shaping EU decisions, they are the ones guilty of doing our country down. It's time we stood up to their defeatist narrative and made the case for Britain's role in Europe. I am a proud patriot who wants the best for my country, and that is why like many I will be passionately making the case to remain in the EU. Now is not the time to leave, it's time to lead.