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
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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