China’s alarming debt pile

China’s public and private debt pile has mushroomed to 255% of GDP in the past few years, warns the Bank for International Settlements.

Andrew Van Sickle
By
published
in Features

China's debt pile has mushroomed in the past few years, warns the Bank for International Settlements (BIS). Its total public and private debt load is now 255% of GDP. It's the speed of the increase that is alarming: the pile has grown from 147% of GDP in just seven years.

Investing so much capital efficiently is a tall order, so it's no wonder that $1.4trn has been lent to companies without enough cash flow to meet interest payments, while it now takes three units of credit to produce one more unit of GDP, according to the International Monetary Fund.

A Lehman-style collapse is unlikely, as all banks are owned by the state and can be forced to keep lending. But perpetually rolling over debt to lousy companies would eventually sap the economy's vitality, as The Daily Telegraph's Ambrose Evans-Pritchard points out, creating a zombie economy.

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Andrew Van Sickle
Andrew Van Sickle
Editor, MoneyWeek

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.

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