http://www.zerohedge.com/news/2015-11-27/chinas-plunge-protection-team-now-owns-6-entire-chinese-stock-market
http://www.newyorker.com/news/john-cassidy/chinas-long-minsky-moment
Other Chinese officials insist that things have changed since then, but it’s hard to know how seriously to take this claim. Even if you accept the official G.D.P. figures at face value, some of the recent growth appears to have emerged from the rapid expansion of the financial-services sector, which, as my colleague James Surowiecki wrote in June, has been caught up in a raging stock-market bubble.
According to private-sector readings, which aren’t filtered through China’s state apparatus, manufacturing and real estate, the two primary engines of the Chinese miracle, are both slumping. The debate among China-watchers is about whether these declines are intensifying or coming to an end.
It is only the latest in a series of moves designed to boost the economy. In the past nine months, the government has pumped more money into the banking system to try and stimulate lending, boosted its own spending on infrastructure projects, and, more recently, engaged in a desperate effort to prop up the stock market by buying stocks itself.
Between 2007 and 2014, total private debt in China rose from about a hundred per cent of G.D.P. to about a hundred and eighty per cent—a jump even larger than those seen in countries such as Ireland and Spain, which subsequently endured deep recessions.
In 2010 alone, the amount of debt taken out by Chinese businesses and households jumped by about thirty-five per cent of G.D.P.
http://www.newyorker.com/news/john-cassidy/chinas-long-minsky-moment
Back in 2007, according to cables released by WikiLeaks, a senior figure in the Chinese Communist Party, Li Keqiang, told the U.S. ambassador that China’s G.D.P. figures were “man-made and therefore unreliable.”
Other Chinese officials insist that things have changed since then, but it’s hard to know how seriously to take this claim. Even if you accept the official G.D.P. figures at face value, some of the recent growth appears to have emerged from the rapid expansion of the financial-services sector, which, as my colleague James Surowiecki wrote in June, has been caught up in a raging stock-market bubble.
According to private-sector readings, which aren’t filtered through China’s state apparatus, manufacturing and real estate, the two primary engines of the Chinese miracle, are both slumping. The debate among China-watchers is about whether these declines are intensifying or coming to an end.
The decision to devalue the yuan, which will make Chinese goods cheaper abroad, hardly indicates that the authorities are feeling confident.
It is only the latest in a series of moves designed to boost the economy. In the past nine months, the government has pumped more money into the banking system to try and stimulate lending, boosted its own spending on infrastructure projects, and, more recently, engaged in a desperate effort to prop up the stock market by buying stocks itself.
Underlying all of this is the fact that China is still dealing with the consequences of an enormous credit and real-estate bubble that has accompanied, and prolonged, the latter stages of the growth miracle.
Between 2007 and 2014, total private debt in China rose from about a hundred per cent of G.D.P. to about a hundred and eighty per cent—a jump even larger than those seen in countries such as Ireland and Spain, which subsequently endured deep recessions.
In 2010 alone, the amount of debt taken out by Chinese businesses and households jumped by about thirty-five per cent of G.D.P.
These figures, which I took from a paper published earlier this year by Steve Keen, an Australian-born economist who monitors debt closely, suggest that what we are observing in China is the unusually elongated aftermath of a “Minsky moment”—that dreaded moment, named after the late post-Keynesian economist, when euphoria is replaced by pessimism, asset prices start to plummet, lenders discover that their creditors can’t replay their loans, and an economic downturn begins. Or, as Deng Xioping might have put it, we have a Minsky moment with Chinese characteristics.
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