China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle

China's government has relied on constant stimulus to keep growth strong, but this addiction is bound to backfire. The country's financial system is a tangle of shadow banking entities, informal financial institutions, and complex corporate funding arrangements that threaten growth, stability, and reform efforts. President Xi Jinping has issued an urgent call for reform, but most economists agree that it is unrealistic. China's Great Wall of Debt is a penetrating examination of the country's opaque financial system and the complex factors that have brought it to the brink of crisis.

Format: Paperback / softback
Length: 288 pages
Publication date: 02 May 2019
Publisher: Little, Brown Book Group

The world has long considered China a juggernaut of economic strength, but since the global financial crisis, the country's economy has ballooned in size, complexity, and risk. Once dominated by four state-owned banks, the nation's financial system is a tangle of shadow banking entities, informal financial institutions, and complex corporate funding arrangements that threaten growth, stability, and reform efforts. The country has accumulated so much debt so quickly that economists increasingly predict a financial crisis that could make Brexit or Greece's economic ruin seem minor, and could undermine China's ascent as a superpower. Earlier this year, President Xi Jinping issued an urgent call for reform that gives the country until 2020 to transform its economy - a vaguely-defined objective that most economists agree is unrealistic. Whether or not China will be responsible for the next global recession, as some experts forecast, the fate of its economy will have far-reaching consequences for the rest of the world. Yet the inner workings of China's financial system are still very much a mystery to most outsiders.

Now more than ever, as the country's slowing economy threatens to drag down the global economy, it is essential to understand the intricacies of China's financial system. This essay will explore some of the key challenges facing China's financial system and the steps that the country is taking to address them.

One of the most pressing challenges facing China's financial system is the accumulation of debt. According to the International Monetary Fund (IMF), China's total debt-to-GDP ratio reached 280% in 2017, the highest in the world. This debt has been accumulated by the government through a combination of borrowing from banks and issuing bonds to investors. While the government has been able to maintain relatively low interest rates on its debt, this has come at the cost of increasing the country's financial risk.

Another challenge facing China's financial system is the lack of transparency. While the government has made efforts to increase financial disclosure, there are still many areas where information is not readily available to investors and the public. This lack of transparency makes it difficult for investors to assess the risk of investing in China's financial markets and can lead to market volatility and instability.

To address these challenges, the Chinese government has implemented a series of reforms aimed at improving the transparency and stability of the financial system. These reforms include the establishment of the China Securities Regulatory Commission (CSRC) and the China Banking Regulatory Commission (CBRC). The CSRC is responsible for regulating China's stock market, while the CBRC is responsible for regulating China's banking sector.

In addition, the Chinese government has implemented a number of measures to reduce debt and promote economic growth. These measures include implementing fiscal policies to reduce government spending and increase revenue, promoting investment in infrastructure and technology, and encouraging consumer spending.

Despite these efforts, China's financial system still faces a number of challenges. One of the most significant challenges is the impact of the trade war with the United States. The trade war has led to a decline in China's exports and has increased uncertainty in the global economy, which has negatively impacted China's financial markets.

Another challenge facing China's financial system is the aging population. As China's population ages, the country's healthcare system and pension system are under increasing strain, which could have negative consequences for the country's financial stability.

To address these challenges, the Chinese government has continued to implement reforms aimed at improving the transparency and stability of the financial system. In addition, the government has implemented a number of measures to support the aging population, such as increasing healthcare spending and implementing pension reforms.

In conclusion, China's financial system faces a number of challenges, but the country has taken steps to address them. The establishment of the CSRC and the CBRC, as well as the implementation of fiscal policies and measures to reduce debt and promote economic growth, have helped to improve the transparency and stability of the financial system. However, the trade war with the United States and the aging population continue to pose significant challenges for China's financial system, and the government will need to continue to implement reforms to address these challenges.

Weight: 204g
Dimension: 159 x 137 x 19 (mm)
ISBN-13: 9781408710340