The Chinese Chart That Keeps The IMF Up At Night

As the IIF reported yesterday, in the first 9 months of 2016 global debt rose by $11 trillion, hitting an all time high of $217 trillion, ro 325% of world GDP. Of this increase, the IIF said that China accounted for the “lion’s share” and while China’s relentless debt-funded stimulus continues to be ignored by markets, one other organization that begins with I and ends with F has also noticed that China has a big problem.
As the IMF recently wrote in its IMFDirect blog, China urgently needs to tackle its corporate-debt problem before it
becomes a major drag on growth in the world’s No. 2 economy. Corporate
debt has reached very high levels and continues to grow.
The International Monetary Fund then lays out at the dimensions of the problem:
From 2009 to 2015, credit grew very rapidly by 20 percent on average per year, much more than growth in nominal gross domestic product. What’s more, the ratio of non-financial private credit to GDP rose from around 150 percent to more than 200 percent, or about 20-25 percentage points higher than the historical trend. Such a ‘credit gap’ is comparable to those in countries that experienced painful deleveraging, such as Spain, Thailand, and Japan.

This post was published at Zero Hedge on Jan 5, 2017.