Chinese Contagion Risks Surge: Banks’ Reliance On Each Other For Funding Hits All Time High

Jon Alternative Media, Blogosphere, Economy, Market Commentary

It’s getting increasingly more difficult for China to deny its massively overindebted reality.
The latest striking confirmation that things in the world’s former growth dynamo are deteriorating rapidly, come yesterday from none other than PBOC advisor Huang Yiping, who during a speech in Beijing said that China’s “deleveraging isn’t making progress” and that the “high leverage ratio is becoming a big financial problem for the country” noting that the household leverage ratio has “surged sharply in China.” Adding something ZH readers haveknown for the past year, Yiping said that “mining and property sectors have the highest leverage ratio” in the country and while the M2/GDP ratio is “not the best gauge to measure leverage for China” he notes that the “leverage ratios in state-owned companies have kept growing since 2008.”
None of this is a secret: one look at the chart below from the IIF according to which China’s gross leverage is now roughly 300% of GDP, confirms just that.

This post was published at Zero Hedge on Sep 25, 2016.