Why China’s Debt Crisis is Quietly Getting Worse
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- Опубліковано 8 лип 2024
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China's economic crisis has been getting steadily worse recently, with increased bankruptcies and a now negative credit outlook. So in this video, we'll explain what's happened recently and how this related to the wider issue of excessive Chinese debt.
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0:00 Intro
1:15 China’s debt crisis
5:03 Why it’s getting worse
6:10 What happens next?
7:41 Sponsor
Maybe you guys know better but I think the length of the sponsor segments might be damaging your promotion within the algorithms. The sponsor segment (which many people will skip) is nearly 20% of the watchtime on this vid. That feels like an amount that could negatively impact video promotion.
To be clear, I'm not complaining about them but I know percentage of video watched is an important factor in how the algorithm ranks videos.
It's pretty much always been like that but I agree it's excessive regardless.
Get the extension sponsorblock
I feel like they are recycling subjects as well. Ive seen multiple videos lately with more or less the exact same content, ie chinas debt, Ecuadors politics, guyana theat... I understand that these have new devellopments but it seems a bit cheap to just repeat everthing and then spend 10 seconds stating the 1 new event
I watch significantly less TLDR than a year or two ago because so much of every video is ads and because they dont really have much actual analysis that's not most superficial and immediately undermined by a "but of course, this could all change."
@@chaznightlord8664 Let's just be grateful there's no colouring book this year, whoever thought that one up needs some serious help..
Did they not learn anything from the problems that Japan developed in the 1990s?
This sounds so similar.
Check out Michael Pettis... He does a great job of explaining just this. Basically the problem with a successful economic model is that the ones who benefit from it get wealthy/powerful and then prevent it from changing once it becomes obsolete. This would be the case for everyone who has followed China/Japan/Brazil's (+more) economic model. Changing it is easy to say but hard to do, due to incumbents obstructing.
In uni, my essay mentioned this. This was back in 2017 when I wrote it and many scholars I referred has been saying the same thing since the early 2000.
However, China had got away from any major crisis in these 20 years and the govt thought they had the last laugh.
Tldr, the problem is alot of these debt are created at a local level and the central govt doesn't has a clear picture of the situation. This is how the debt kept growing.
This is nothing like it.
This is far worse.
We are talking about housing for more people than the Chinese population, all standing vacant.
Housing prices are down around 10%.
China tries to hide all of this, because openness speeds up the collapse, but there is nothing they can do.
Claiming that they have 5% growth, when they just lost 30% of their economy (the housing market), is a desperate attempt at stopping the economic collapse by lying.
it's actually worse, and on a much larger scale. This has the potential to wind down the global economy considerably.
@skyeye61 the local government has to hand over around 60% of the tax revenue to the central government. And the local government can keep selling more land to pay up as long as realestate prices are going up. That's why the local government didn't care until the bubble burst 2 years ago, and the central government didn't worry until the local governments can't send up taxes any more.
You are still missing the huge amount of off balance sheet debt owned by local governments. The shadow bank debt too.
in China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days.
Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, heath, education and even marriage prospects
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Unlike here in the west where we are going the other direction
@@DW-op7ly Top notch logical unbiased explanation, appreciate it 👍.
Imagine going deeply into debt to buy a residence in "The Tofu-dregs Honeyville Paradise Development" only to find the residence isn't finished, won't be finished, and what does exist is falling apart.
Don't forget about the Foreign Company's pulling out of China and going to other Asian Countries. Plus the number of foreigners that have left China.
Many big companies like Hyundai, LG electronics and Samsung electronics are moving to vietnam or India For cheaper labour and lesser political issues
in China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days.
Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, heath, education and even marriage prospects
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Unlike here in the west where we are going the other direction
Can you report on the ongoing housing crisis in Canada? Out of the g7 countries, its housing prices have soared far above the others.
while having the biggest amount of land and miniscule population. Bruh
@@AmirSattAustralia has a whole ass continent and with a small population, still finding itself in the same housing rut haha. (To be fair to both Oz and Canada, most of the land is inhabitable lmao)
Damn even more than the US? Thats wild. I'm wondering if they're still more affordable though relative to income
chinese bought a lot of houses in canada.
@@notyilli_2481why don't canada and the Australian just trade some of their land, so now Australia has some nice cold land and Canada has some nice taosty land.
They can probably drag the land with a few container ships
The big problem you didn't touch on is how government is funded in China. There is virtually no taxation from income or consumption from individuals, a huge problem when the debt funded infrastructure stops being a vehicle for government revenue
China does have income tax, corporate taxes, sales taxes, etc. The problem is that most of it goes to the federal government and is spend on federal programs like defense and civil service. But the local government have mostly fund themselves and have restrictions on what's allowed.
The local government don't fund themselves with infrastructure, building infrastructure is done to boost GDP.
They create companies that take out loans with the backing off land, and that debt gets used by the local government. Theoretically if they default the lender gets the land but if property prices decrease too much it's basically unsecured
There is taxation on income.......
@@raymondcheung409 less than 10% of the population pays it .........
@@yrv378 genuis. With how china society is digital instead of cash. You'll think it's a lot easier to handle taxes.
@@raymondcheung409 the taxed money goes to the federal government, not regional. At the local and regional level they get money from land leasing and not from taxing.
China is indeed in decline. Not necessarily collapse but decline.
Relative decline not absolute decline, the same as the US
@@Alex-fm5kesame as every industrialized country. Chinas is particularly bad because of their self imposed 1 child policy though.
At this point the real question is when they are going to plateau like Japan.
Not a good news, China in decline is a desperate Chine, and desperate China can do a lot of stupid things
@@BrightWendigo except they aren't industrialised and they are still poor and authoritarian.
This is what happens when you think you can keep growing forever. Expectation > reality...
You can. US still grows at 3%.
@@user-xw3vi4nk2y It's the same as inflation, so not really growing. Also I meant 'China super growth'. Remember in the 2000s, everyone think China is gonna overtake the US? LOL
@@user-xw3vi4nk2y If you "grow" at the same rate as inflation..... you are not growing.
@@user-xw3vi4nk2ythe us also has economic decline. China claims it hasn’t had a recession in 70 years
@@chandlerblachut3878 wrong. Us is not in decline.
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On your G7 Debt to GDP Ratio chart at 1:34 you forgot to put Canada on it.
Japan's economy started to stagnate and crash about a decade after its working age population began to shrink. China seems determined to start that process sooner.
As a long time follower of TLDR news, I know you guys have done two or three other videos on the Chinese debt crisis and they were all very useful. As a request, can you put links to your earlier videos in the information for 'continued series' so that we can go back and reference those videos if we want to. Thanks!
Germany is the same. 70% dept officially. But then you have to add special finanzing intruments ("Sondervermögen"), the deficid of the Federal pension fund and Federal health insurance.
It's much worse than that since China's reported GDP is undoubtedly much higher than their actual, real GDP. According to some economists, their real GDP could be as low as 5 trillion, only a third of their reported GDP. I definitely don't think it's that low mind you but even economists who used to defend China have to admit at this point that their GDP figures just don't add up at all. Right now, China is still saying that they're going to grow by 5% this year despite the fact that every sector of their economy that we can actually independently verify instead of just trusting the CCP at their word (their real estate, their stock market and their exports) are all down quite badly this year.
You are talking nonsense. China's share of global trade is increasing to record high this year.
Western institutions like the IMF literally just said China will grow more than 5% this year. Please read some real news instead of TLDR
@@dengist8172IMF is chinese shill just like WHO. How anyone still trust these organizations after covid is beyond me.
@@jklee5419 Just type ''China export down'' on Google and please tell me what number you see? Cause personally, I see that their exports have fallen by 6.4% this year. November is the first month they've seen a growth in export in a long time and even then, it was just 0.1%. This isn't surprising either, they've been losing manufacturing jobs to Mexico and India for a while.
Not that I expect to convince a Chinese bot but hopefully, thanks to my comment, no one is gonna fall the incredibly obvious lie you've told.
Edit: Oh and I guess I should also clarify the other two before another Chinese bot tries to contradict me: their stock market hit a 5-years low a few days ago and for their real estate, property sales by floor area fell 20.33% year-on-year despite the fact that price are going down.
@@jklee5419 no he isnt, just because you dont WANT it to be true does not make it true, global trade is irrelevant to GDP and growth figures. you can have surging exports and also GDP decline.
Small correction: for debt to gdp, both Canada and Germany have a lower debt to gdp than china.
Canada was over 115% in 2021 and likely even higher now
i am getting more getting addicted to geopolitics when i started know about TLDR News
Bhai yeh log kafi chutiya bhee banate hain. They have a strong pro-western pro-left bais so they are quite anti-china, anti-India and massively anti-Russia.
It's actually even worse than you show here. That's because China heavily inflates it's gdp figures. Even the former premier, Li Keqiang, who recently passed away, said that the Chinese gdp figures are very unreliable.
Some studies show that Chinese real gdp figures could be up to 60% lower. This means the actual debt to gdp ratio is much worse.
only one study suggest measuring GDP to night light, and single study isn't enough reliable.
I've seen these estimations and I've seen counter estimations saying it's far less exaggerated or about right...so not sure who is right. In regards to Li's words - it wasn't so much that the numbers are fake, it's that they are "man-made" ....which kinda means the same thing, but not quite. For example, If China's organic GDP is 2-3% (many estimations I've seen) but China wants 6% - they make up the difference with debt spending on usually unproductive assets (think bridges to nowhere and ghost cities). These show pretty GDP numbers but are poor indicators of actual organic economic activity or value added. So all the people who say "Oh ya well their GDP is 5%!" yeah but a lot of that is meaningless spending on nonsense things using debt just to create a nice GDP number on paper.
@@rainboworiental9521no. Don’t be a dumb nationalist. The real GDP is at most 50% of the official number and likely quite a bit lower.
it probably like a 40% rather than 60 but still assuming 40 % their debt to gdp is about 196%
one more case study is of the high speed rail but no one talks about it
The debt problem is basically what happens when the government decides to treat an emerging country like a developed country.
developed but not developed at the same time. scary but incompetent at the same time. cope
@@dustinchen It's China that says they are developed. And Russia has made it clear that a nation can be scary and incompetent at the same time.
@@2winceball weird cuz I’ve heard xi say they’re developing all the time (new years speech)
@@dustinchenReality is not binary. It really can be 2 things at the same time
@@dustinchenThey claim whatever favors their interests
Once China joined WTO, their finance model was like Japan, no one gets turned down for a loan- it's the only way to start a business and hire employees, since no one had any money of their own (after Mao departed).
Every bubble has to burst.
Do not assume that a Chinese crash in unlikely because it has not happened yet.
This is akin to being a turkey and assuming that because you are being fed and looked after by your farmer that you will live a long life. (until the surprise of thanks giving (or Christmas) comes along)
All it takes is an unpredicted event to send an economy into turmoil.
(Read the Black Swan by Nassim Nicholas Taleb)
Yeah bc people from 2008 and 1929 know all about how past performance is a good indicator of future performance…
in China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days.
Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, heath, education and even marriage prospects
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Unlike here in the west where we are going the other direction
China’s financial figures are a ‘fake it ‘til you make it’ paradigm. There is nothing substantial in their computation.
Do your debt to GDP ratios use the inflated government GDP numbers or corrected GDP numbers?
Inflated government number is official statistic. So that number is used for everything else
Besides that you would have to look at ppp adujsted gdp anyways, to compare countrys.
If government prints trillion dollars and pays you to dig a hole with it. It will show GDP increase of trillion dollars. Of course it wouldn't add anything to the economy but inflation.
Don't believe in chinas gdp figure
@@mam0lechinookclan607no, you don't use PPP adjusted GDP. 1 yuan of debt is 1 yuan of debt. 1 US dollar of debt is 7 yuans of debt. Prices of goods don't affect the amount of debt. You might adjust for fluctatung foreign exchange rate for the debt owed to foreign lenders, but that's about it.
The US and UK debt crises are getting worse, too.
It's funny when the guy said that the Chinese local governments are borrowing money to fund 'GDP boosting infrastructure projects'. US government has been borrowing money to fund wars for other countries as well as their own military.
It is so large it is hard to keep quiet.
Pooh bear got bigger problems than a hungry belly now!
I think US debt needs to factor in their massive infrastructure repair backlog. Just because the debt is held in crumbling bridges and leaking pipes doesn’t mean it isn’t debt.
This is true. Due to mandated low-density urban sprawl, we've over-extended our infrastructure to the point where the maintenance cost per person has gotten unsustainably high, and is now a bit of a ticking time bomb.
If my memory serves, the US approved a trillion $ in infrastructure maintenance and upgrade package not too long ago, so the constructions should be in progress currently.
So many shills trying hard to cope with whataboutism lol.
A 40 year old US bridge is probably in better shape than a new Chinese bridge.
@@danz1182 Have you… have you seen all the US bridges that keep collapsing? And all the cities that go years without clean drinking water?
5:10 Chinese property developers and Chinese home buyers assumed, property prices will ALWAYS go up and up and up 😂. Sounds logical, what can possibly go wrong 🤓🤓🤓
Also there is a big shadows banking sector in China. The amount of debt is impossible to be sure, but what is known is that sector is in distress, for example 万向 just defaulted in interest payment.
in China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days.
Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, heath, education and even marriage prospects
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Unlike here in the west where we are going the other direction
That was a pretty good analysis. China has a real problem going forward. Their old model for economic growth has played out. infrastructure/housing, exports, foreign investment and cheap labor/production. They need to change to a more domestic consumer demand model. But every time the CCP has tried that it has failed.
The fact that China is at the front end of a sharply downward demographic trend makes a consumption driven economic model far more difficult. Especially when consumers are already up to their ears in debt as the video explained. And with an upside down demographic (lack of young consumers and producers to very expensive senior citizens) that is another looming economic disaster. China doesn’t have a social security system like most G7 countries so all those one child families aren’t going to have multiple children to support their seniors in their old age. That will likely further smother any CCP plans to jump start a consumer driven economy.
CPC
so much misinformation in this post I don't know where to begin; best to let the uninformed West wallow in their ignorance
Communist Party of China
It’s like yuan / renminbi
CPC and CCP are one and the same 😂😂
United States and States ol’Unite
It’s the same thing! 😂😂
In China a moderate condo will cost you 20-40x your annual salary, plus it comes bare, you have to do all the finishing renovations yourself - in spite of the fact that there's a massice over supply (explain that free market economists). Their economic strategy has been: build even more apartment buildings. For some reason the US seems to be determined to copy this model, except without building more housing supply.
Define massive oversupply...
If there are 2 billion condos for 1.4 billion people, there's definitely an oversupply. But if 1.98 billion condos are sold, and 29.9 of the next 30 million condos are sold before they can be occupied, there's still tons of demand in the market.
Of course, if your retirement is based off selling your third and fourth condos to a shrinking homogenous society where everyone has one condo and isn't interested in buying a 2nd, I hope you're able to work past 75.
The biggest reason for this apparent 'discrepancy' is property speculation. Many of them are not buying properties to stay in but to sell it off for profit. It has been causing a bubble. Like many of these schemes/plans to 'make us a lot of money quick', it has to ride on a wave of stupids who are willing to jump in. The ending is always the same, there will be an even larger bunch of stupids who will be left holding the baby going WTF. That is why the CCP went after the real estate developers like Evergrande and Country Garden. They telling them to cut out the shit cuz they very well know the population and economy can't support the property glut and when the bubble burst it's going to end in tears for many many many people.
6:15 past performance such a good indicator of future performance ngl.
For non brits, what we call what I just did is “sarcasm”.
Well researched video, for once, please do more of these.
I'm a bit disappointed you didn't mention the existence of the Li Keqiang index and its implications for the Chinese GDP figures.
What are the implications?
Chinese culture could play a part of it too though. A lot of Chinese youth have taken up the habit of spending and putting themselves into as much debt as possible. It's some sort of live in the moment mentality.
A great opinion piece 👍.
+10 social credit added to account
@@rotmgpumcake 🤣🤣🤣
You can cook the books only for so long... and only as long as it doesn't impact stakeholders from outside of China.
Forcing iPhones to be produced locally in the EU can significantly reduce the EU's trade deficit with China by at least EU$50 billion. But greedy person is more likely to be dishonest in their dealings with people especially as it relates to finance.
If iPhone is made in Europe it will cost €3000. 😂😂
@@user-xw3vi4nk2y They will probably don't produce them in Luxembourg with a >100K average income but in Hungary, Romania or Bulgaria, labour cost is less as in China.
Are you serious? More labor cost in EU will lead to higher prices! The highest profit margin is why Apple can keep the first position.
in China in 2008 around 70% of the people in their real estate markets were buying their 1st homes in their cities
By 2018 around 70% of the people in their real estate markets were buying their 2nd and 3rd homes in their cities
That’s why you are hearing about problems with their property developers these days.
Because back in 2010? Their Central Government started cutting of money flow to these developers.
Thus why you heard about Shadow Banks and Underground Economy back then, that their Government had to come into to shutdown or regulate.
Even then, It took them almost 14 years to get their overheated real estate under control
Heck they were about to introduce a nation wide property tax, but then trump started the trade war in 2018
Why is their Central Government doing this?
Because there are still a few hundred million poorer rural folk they still expect to move to the cities to join their more well off urban city folk countrymen.
Problem is these property developers were building higher end homes, and not building the affordable homes these rural migrants will need
In China
Owning a home in the city you migrate to? Affects your employment, heath, education and even marriage prospects
Thus the common prosperity push and the crackdown on the overt displays of wealth in China
Their Government probably figured out you disenfranchise the people at the bottom of your society they are the ones most likely to act out in protest
Unlike here in the west where we are going the other direction
Not trolling but that jumper 😂. The actual narrative is very good.
And the private sector in China is the "private sector", which probably adds to state debt
Yeah, GDP growth slows to a halt when you quit building ghost cities.
So they are sharing the fate of 1990s Japan
Except it’ll be much worse…
i doubt... but the population pyramid will not suppose their rise again like in the 90s... the Chinese phoenix will only limp. and if they decided to invade Taiwan and Korean War 2.0, they will claw...
Far worse.
These fools do not understand how dictatorships work, nor how economic collapses work.
Collapses do not happen in a day.
Dictatorships are incentivized to slow any collapse.
The Beijing stock exchange put up a ban on selling stocks.
That may make it look like China's stocks are doing fine on paper, but that is like amputating the head of the stock market.
The head may still smile, but is very much dead.
Drippy sweater king!
The debt crisis couldn’t happen to a nicer country and government. 😂😂😂😂😂
And anyone paying any attention over the last 20 years saw it coming
My guy a video comes out every day on how China is on the verge of collapse.
It's gonna keep growing cause China a net producer. Their economy won't crash
Is it only me or does it look like the camera lens is dirty? Haha
UK general government gross debt was £2,636.9 billion at the end of Quarter 2 (Apr to June) 2023, equivalent to 101.2% of gross domestic product (GDP). UK general government deficit (or net borrowing) was £63.5 billion in Quarter 2 2023, equivalent to 9.5% of GDP.27 Oct 2023
"interest rates cuts won't change anything if people are focussed on debt reduction" Such a daft statement - interest rates are incredibly important for those in debt
In CCP, line must always go up.
China has debt problems? which has biggest reserves and lot of savings while US has 33 trillion USD debt..which is most worst in all
Please make video on us debt crisis whose debt is 130% of his gdp
source? I cant find any of what you're mentioning, not even the news site that you mentioned on 00:36
That is an article in the Financial times December 3, 2023. First hit on google.... did you even try to find it?
"welcome to the club comrade" - Uncle Sam
Canada was left off the G7 chart lol
“Roughly the same as the US.” 😳
If you dont even have accurate stats on your own country how are you supposed to find a solution.
And If your allies are only authoritarian and the others are bullied into being your friends. What allies will Support you?
Wait china is a developing economy? 😂 i am going to need another video explaining that!
The "Siesta People" will never get their house in order!
The PRC starts to look more like Sas scandinavian airlines.
Their economy is just as hollow...
China saw 2008 and was like, hold my beer
Interesting debt to GDP chart.
I wasn't aware that Canada had left the G7.
It's surprising that that didn't get more news media attention.
Meanwhile, US federal debt alone is $34 trillion alone (more than 100% GDP), and that doesn't even account for state debt, local government debt, corporate debt, household debt, student debt. I know which country is up to its eyeballs in debt.
Yeah but US dollar is the global reserve currency so the US can do that
@@prakyathkumar8618 That's true for now, but it's high risk if things change and it's reckless of them, because when change is needed, those changes are going to be very difficult to do politically because it would mean hard times for the population.
Basically, what seems like a blessing for the US, could end up being a curse in the future, whereas other countries to try to keep their debts under control will likely have fewer problems for it.
It also stands to reason that has more of the world develops, it's going to be increasingly difficult for the US to hold onto its reserve currency status, pressure from all sides will likely build into creating a different system.
Contrast to US?
A video that talks objectively but negatively about China? Prepare for some WuMaos in the comments.
what do you mean? All we got on youtube are videos talking negatively about China. Entire channels dedicated to it
Isn't government/national debt meaningless? I thought it was just a quirk of economics?
Not at all. Why would you think it's meaningless?
@@seneca983 Why wouldn't it be? We've long since abandoned the gold standard so our current floating currencies means governments don't need to borrow anything to produce currency anymore. Government debt is just bonds purchased by the country's own private sector, and paid back each year by the government as currency when the bonds mature; a quirk of capitalist economics and a political tool.
@@st.altair4936 Generally, the bonds need to be paid back with interest eventually. You can refinance them by issuing more bonds, but you can't increase this amount indefinitely because at some point the interest payments become larger than you're able to service because taxes can't be increase indefinitely. What do you do then.
You could just default on the bonds, but this can lead to numerous lawsuits around the world and after that you probably couldn't finance spending with bonds because you wouldn't be trusted to pay them back.
You could print more currency to pay them but this isn't really a better solution. You would be effectively inflating away the value of the bonds which isn't that different from defaulting on your bonds. You could avoid lawsuits that way since you have technically paid what you promised even though its value has been mostly eroded away. However, you would still find it difficult to borrow again since potential creditors wouldn't trust that wouldn't devalue your bonds through inflation again. On top of that, your domestic economy would be hit with a high rate of inflation which would cause all sorts of distortions and therefore reduce economic efficiency.
An american channel saying that china will have a crises beacuse of debt is just rich.
Yeah, that all seems reasonable enough. Thanks.
It is the same old BS narrative that everyone has been parrotting the last 20+ years. It's anti-China propaganda. During those 20+ years, China grew faster than any other nation in history. It's not declining anytime soon.
Nah, it is far worse.
This channel doesn't see trough CCP propaganda.
Why. How come millions of Americans and British people's are living in street with tent and canvas including Canada why why why
This video is 20% ad. Is that normal?
Didn’t Japan had a similar situation back in the 90s?
No. Japan's gdp per capita was 2 times larger than usa at the time. China gdp per capita is 1/5 of usa. 😂
@@user-xw3vi4nk2y In which year did Japan's GDP per capita double that of the United States..genius?
@@jkc3738 go google you fool.
How many ads are you gonna have in 1 video!!
quietly? 😆
But how will this affect Lebron’s legacy?
As a Chinese, i approve
Whom do they debt?
And the earth is flat.
Can u compare with US debt
that's what you get with a dictatorship
Neat
And they say that China thinks in decades while the West thinks in election cycles.
While China makes many mistakes, it's not wise to discount their long term planning ability. This will always be an advantage autocratic governments have over democracies.
that phrase is still true tho
That's absolutely true though
If China really thought decades ahead, they wouldn't have stuck with the One-Child policy all the way till 2016. It was already clear by the 2000s that their demographics had taken a sharp hit.
They also wouldn't have implemented a zero-COVID policy that tanked their GDP growth for nearly 3 years. It was 100% a knee-jerk response to the crisis.
And that's why they started to grab land & sea territory
I don't know man, I've been hearing about the _"imminent"_ Chinese colapse since the beginning of the century...
Oh yeah, this time is _"real not fake for sure"_ 😂
There can still be big issues that don’t cause a total collapse
TLDR is British. It is Spilt not Spilled
If Chinese debt is issues in Chinese currency, they can print as much as they want. Keep their currency devalued and keep exporting.
Somewhat what US is doing.
I don’t believe it’s a major issue. If debt is paid, literally all economies will implode.
So what is the problem?
"China's debt to GDP is below every G7 country except Germany."
What other stats can be modified by simply ignoring Canada?
The second largest country in the world, the USA, is awaiting breathlessly.
You guys might want to link up with china uncensored, I knew China was on this exact path since 2014, you political analysts are well behind the curve.
Hi @TLDR. Love you all but you guys made a factual error at 1:27. Ben claims that China has a lower Debt-to-GDP ratio than all of G7 countries except Germany. However, Canada, a member of the G7, has a 49.83 Debt-to-GDP ratio - even lower than Germany's!
Please fix this or give it to your shoutout in your future corrections video.
Best regards,
A deeply patriotic Canadian
UK, aka the Sick Man of Europe, just had another city, Nottingham, went bankrupt.😆😅😂😂😅😅😆
You neglected to cover how this will effect the Fortnite skin market
Zeihan was right
What about Russia ?
This will be a haircut for the ages.
The sponsor plugs for this channel are more irritating than any of the channels I follow.
Your always behind and your information is taken from old sources.
I feel like this channel really needs like a video series that defines it. Not unlike how Vox has their deep dive videos like Atlas. It's just gotten bland over time. The TLDR channels, I mean. Nothing really defines them.
Maybe you should know that China doesn’t really have a “debt crisis”. In fact the US has a huge debt crisis. Wondering why there’s “inflation”? It’s because they borrowed too much and need to pay back somehow. That’s where the extra interests charged to the public comes in play
America shows off its Potemkin houses with significant advertising campaigns. Everyone invests because there are no alternatives. The difference in China is that the Chinese disguise the lie with their smiles. The money invested has never been there. There is a rude awakening when the truth from this smile becomes a certainty for everyone.
In reality, China has been the second economy in the world. Chinese government use money for developing their infrastructure and eliminate absolute poverty (no homeless people, no people died from hunger). As you can see in the video, China's debt to GDP ratio is far more lower than other developed countries. This enough to approve that China has made great effort which is undeniable. Even though China took unhealthy strategies in real estate economy and create a bubble in it, CCP has realized the problem and try to solve it. There is never a Chinese local government bankruptcy during the past decade.
the most indebted country in the history of the world! USD $11 trillion!
The people of China believe that the CCP will prevent Chinese real estate prices from ever falling. That is an implicit debt of around $50 trillion. It’s an amount that the CCP will never be able to cover. Far greater than the US debt. We’ll see what happens when the CCP is inevitably forced to default. How will the people of China respond when their supposedly safe life savings suddenly disintegrate?
5:30 do try to understand basic numbers, TLDR! China doesn't have *_lower GDP_* but just *_lower GDP growth!_* Lower GDP would affect the debt ratio but lower - but still positive - growth would make it *_lower_*
GOOD
Not for the normal citizens of China, no. Of course it’s good that China becomes less powerful and it’s good that the people of China stop believing the CCP can deliver growth and progress - but that youth unemployment is awful and all those millions who lost everything due to falling house prices have had their lives destroyed.