Monday, September 07, 2015

Discussions on China

Prasad, Pettis lock horns on China growth prospects from March 2014
Michael Pettis’s Main Arguments:
  A significant part of China’s growth has come from wasteful investment.
 That’s not sustainable as debt has grown faster than debt servicing capacity.
 Fights over who faces the cost of bad loans will add to downward pressure.
 Arithmetic of rebalancing means even if household income growth can be maintained at 5 percent to 7 percent, GDP growth must necessarily be lower.
 China’s limited institutional development makes it difficult to absorb large volumes of capital productively.
 GDP growth of 3 percent to 4 percent, combined with progress on rebalancing, would be a significant achievement.
Michael Pettis blog post on September 1, 2015
From Steve Keen Why China had to crash part 1, part 2
A report from Nikkei Asian Review on September 6, 2015: "Chinese Finance Minister Lou Jiwei told his Group of 20 counterparts that the country's economy is likely to face tough conditions for up to 10 years, sources familiar with the G-20 meeting said Sunday." Via Marginal Revolution

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