...China is putting grey rhinos – business empires that inflate through debt-fuelled asset acquisitions – on a financial diet.
...The elephant in the room is really China’s annual monetary and credit growth targets that consistently exceed the nominal GDP growth rate. The debt bubble is a consequence of this policy.
...Only people who don’t intend to repay want to borrow again and again.
...By making credit easily available and suppressing household disposable income, monetary expansion is channelled into speculation in asset markets.
...If we benchmark China’s performance against other East Asian economies that have pursued an investment and export development model, China has underperformed both in terms of per capita income and household disposable income share. We should keep in mind that China’s economy is based on sacrificing people’s living standards.
China’s dinosaur, its vast state sector, exists to secure political stability, and stability of the political system is its top priority. The economy, the financial system and everything else must serve the aim of maintaining stability.
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