Debt Ratio Nears 300%… A Sobering Outlook as Growth Falters and Leverage Hits Record Highs

In a worrying turn of events, China’s economic landscape is overshadowed by dark clouds as the debt-to-GDP ratio approaches a record high, nearly touching the ominous 300% mark. The slowdown in China’s economic engine directly contributes to this surge, raising concerns about the nation’s financial health.

Quoting a report from the National Institute of Financial Development (NIFD), Chinese media outlets reveal a macro leverage ratio that climbed by 13.5 percentage points in 2023, reaching 287.1%. Chief economist Zhang Zhiwei warns that the nominal GDP growth rate lagging behind the real GDP growth rate signifies a potential dip below the nation’s potential growth rate.

As China grapples with these economic challenges, the report advocates for the government to boost the nominal GDP growth rate to maintain stable macro leverage. Amidst these financial intricacies, the echoes of the money printer going ‘BRRRR’ resound, showcasing China’s surging money supply that outpaces even the United States. The delicate dance between economic growth, leverage, and stability unfolds, posing critical questions about China’s economic trajectory in the coming quarters.

Sources:

www.msn.com/en-us/money/markets/china-s-economic-outlook-darkens-as-debt-ratio-approaches-300/ar-BB1hxTTg?ocid=msedgntp&pc=U531&cvid=d51b963885644974b78c12a22c141792&ei=30

Money Printer goes BRRRR:

China’s Surging Money Supply outpaces USA pic.twitter.com/waG6ZfJBHH

— Wall Street Silver (@WallStreetSilv) January 31, 2024