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
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
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.