I do not understand this economic stuff
US debt is 122% off GDP and there is a expression of concern and yet according to SCMP Chinas debt as% of GDP is 317%. Shouldn't we be worried by Chinas debt to GDP ratio?
1. There was no point to the article that was posted.
2. The article writer had no clue what she was discussing, no context, just a bunch of numbers.
3. Too much debt becomes a problem when you cannot pay it back or pay the interests on it. Such as the Latin American debt crisis which tend to happen a lot. Greece's problems with the EU a few years ago.
4. Whenever someone somewhere, complains of too much debt, that is what they are getting at. The creditor wants to know if the debtor can pay it back. When the debtor cannot pay it back, that is a big problem for the debtor. It is problem for the creditor too, but they usually rich, and generally will buy up everything from the debtor country such as utilities or natural resources at fire sale prices.
5. When they say China has too much debt, they are really saying China is going to run into problems like Latin America potentially. Our friend comrade Chang at work.
6. A business borrows to expand. They take on debt to go make money, which in turns pays back the debt. That is what China has been doing. In other words, the Chinese economy outgrows it debts.
7. The debts the US government is currently undertaking with the QE, and free money in the CARES Act for example, that is not borrowing to expand growth, that is just to prevent total collapse of the economy and the financial system.
8. That article was largely dezinformatsiya, as like they were talking about increasing debt as being bad to China, and the levels of debt is bad for China. It's only bad when you cannot pay it back. At 5% to 6% economic growth, that is a good investment.
