Chart of the Day: China’s Credit Bubble

By Global Macro Monitor

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Just a follow up to our last post. This chart from the IMF illustrates how China was able to skirt — in relative terms — the deep economic contraction by generating a huge expansion in domestic credit and increase in its money supple. This, while credit was contracting in the rest of the developed world.

Imagine the politics of, say, the U.S. administration or state and local governments ringing up Citibank and Bank of America and telling ordering them to extend credit to a construction company to build the country’s largest shopping mall? Great policy until the mortgage has to be paid. The tremors, of which, are now being felt in China’s financial sector.

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2 Comments
  1. Anonymous says

    It’s understandable for the Chinese to find themselves in debt trouble as they did not experience the credit crisis of the 1930’s (Depression), but what is excuse for the Western World that did?

    China following the lead of America & Europe will lead to their down fall. 

    Debt is not the solution to anything!

  2. Anonymous says

    It’s understandable for the Chinese to find themselves in debt trouble as they did not experience the credit crisis of the 1930’s (Depression), but what is excuse for the Western World that did?

    China following the lead of America & Europe will lead to their down fall. 

    Debt is not the solution to anything!

  3. Raoul says

    abgary1 ever hear of the Silver Purchase Act of 1934?? The US legislation destabilized the Chinese finacial system, caused the fall of the Natioanlist Government and led to the revoilution which saw the Communists take power in 1949…..Do your homework.

  4. Raoul says

    abgary1 ever hear of the Silver Purchase Act of 1934?? The US legislation destabilized the Chinese finacial system, caused the fall of the Natioanlist Government and led to the revoilution which saw the Communists take power in 1949…..Do your homework.

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