24/01/2014
Li, it is time to wake up!
Our dear Li Keqiang has no choice; he must boost the economic growth, meaning huge injections of capitals. Although the public debt reached 45% of the GDP, the private debt reached a peak: from 125% five years ago to 215% of the GDP today. In addition, there is an important amount of bad debts in its economy. All in all, it is a threat on the financial system stability. Just after Li Keqiang was appointed, Fitch decreased the Chinese grade. Marc Ladreit de Lacharrière, president of Fitch announced the 15th May 2013 “When the dragon will be short of breath, the world will cough”. He is raising the alarm regarding the potential outcomes of the current politic. China is currently trying to solve its financial statements using its huge cash reserves and a high level of savings. Is it going to be sufficient? If not, the Chinese government could sell its American bonds (hundreds of billions of dollars). The world would be in jeopardize!
Every developed country has encountered the same situation: after reaching a peak for many years, their growth rates decreased. Let’s see how the Chinese government is going to rebound and the different innovations and regulations that are going to be created. I believe that there are many opportunities in China if they successfully develop the rural population, the necessary infrastructures, proper social reforms that meet the population needs and of course if they facilitate foreign investments. To be continued
Li, it is time to wake up!
Our dear Li Keqiang has no choice; he must boost the economic growth, meaning huge injections of capitals. Although the public debt reached 45% of the GDP, the private debt reached a peak: from 125% five years ago to 215% of the GDP today. In addition, there is an important amount of bad debts in its economy. All in all, it is a threat on the financial system stability. Just after Li Keqiang was appointed, Fitch decreased the Chinese grade. Marc Ladreit de Lacharrière, president of Fitch announced the 15th May 2013 “When the dragon will be short of breath, the world will cough”. He is raising the alarm regarding the potential outcomes of the current politic. China is currently trying to solve its financial statements using its huge cash reserves and a high level of savings. Is it going to be sufficient? If not, the Chinese government could sell its American bonds (hundreds of billions of dollars). The world would be in jeopardize!
Every developed country has encountered the same situation: after reaching a peak for many years, their growth rates decreased. Let’s see how the Chinese government is going to rebound and the different innovations and regulations that are going to be created. I believe that there are many opportunities in China if they successfully develop the rural population, the necessary infrastructures, proper social reforms that meet the population needs and of course if they facilitate foreign investments. To be continued