China’s Furious Stimulus-and-Debt Binge Backfires

[marmar]

China’s Furious Stimulus-and-Debt Binge Backfires
by Wolf Richter • May 1, 2016


[font color="blue"]Fabled transition to a service economy? Forget it.[/font]

The export and manufacturing powerhouse of the world, the locomotive – along with the US – of the global economy, and an indicator of the global economy itself, disappointed economists once again. The operative word in the media today is “unexpectedly.”

China has been on an glorious debt-and-stimulus binge for the past few months. New corporate borrowing shot up to record levels as the People’s Bank of China opened all valves, and juice rushed through the state-owned megabanks to corporate borrowers and others all around.

In the first quarter, total debt ballooned by 6.2 trillion yuan (nearly $1 trillion), the largest quarterly jump ever, to a record 163 trillion yuan ($25 trillion), or 237% of GDP, up from 148% of GDP in 2007, according to some of the more benign estimates. Others peg total debt as high as 282% of GDP. Corporate debt alone is now estimated at 160% of GDP. But no one knows for sure. With the Chinese economy, everyone is groping in the dark.

It’s not the debt itself that scares observers, but the speed with which this debt has ballooned. It’s impossible to invests this sort of moolah this quickly in productive activities whose proceeds would allow for this debt to be serviced. .............(more)

http://wolfstreet.com/2016/05/01/china-stimulus-debt-binge-falls-flat-manufacturing-service-pmi/

[hedda_foil]

1. China is moving to a service economy???

Apparently this is a well known fact.

But the decline of manufacturing suddenly doesn’t matter in China because the government is transforming the economy into a service economy. It is transitioning the economy away from its reliance on manufacturing, which is shrinking. Services are now the new locomotive. That’s the plan.

So the Chinese are gonna get flimflammed like the U.S. and Europe, as the oligarchs move in for the kill, eh? And the manufacturing moves to where? Could it be the TPP countries? And where does that leave the people in the good old USA with its so called postindustrial service economy?