China’s total debt surged to 251% of GDP at the end of June 2014 from 147% at the end of 2008, according to Stephen Green, chief China economist at Standard Chartered Bank.
By comparison, the US had a 260% total-debt-to-GDP ratio in 2013; the UK 277% and Japan had debt of 415%, according to the Financial Times today.
At end 2013, Ireland's public and private non-financial sector debt was 499% of GNP (gross national product, which mainly excludes the profits of the significant foreign-owned sector), this compared with 304% in Greece; 300% in Spain; 266% in Italy and 201% in Germany.
“Overall credit growth continues to outstrip growth in value added, which is not sustainable,” said Stephen Green.
China's official auditor reported last December that local governments had outstanding debts of $3tn as of the end of June 2013, up 67% from the previous audit in 2011 and corporate debt hit a record $12tn in 2013 Standard & Poor's estimated, equivalent to 120% of GDP
China has about US$4tn in foreign exchange reserves.
A common argument is that most of the debt is financed internally. However, the example of Japan shows that the validity of that will ultimately depend on the trajectory of debt.
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