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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Tony Blair won't endorse the Labour leader - Jeremy Corbyn's fans are celebrating

The thrice-elected Prime Minister is no fan of the new Labour leader. 

Labour heavyweights usually support each other - at least in public. But the former Prime Minister Tony Blair couldn't bring himself to do so when asked on Sky News.

He dodged the question of whether the current Labour leader was the best person to lead the country, instead urging voters not to give Theresa May a "blank cheque". 

If this seems shocking, it's worth remembering that Corbyn refused to say whether he would pick "Trotskyism or Blairism" during the Labour leadership campaign. Corbyn was after all behind the Stop the War Coalition, which opposed Blair's decision to join the invasion of Iraq. 

For some Corbyn supporters, it seems that there couldn't be a greater boon than the thrice-elected PM witholding his endorsement in a critical general election. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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