February 1, 2019
China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle
Dinny McMahon
Famed short seller Jim Chanos remarked that China’s economy was on a “treadmill to hell” back in 2010. Celebrated hedge fund investor George Soros warned that “a hard landing is practically unavoidable” two years later. China has kicked the can down the road since then and added $12 trillion worth of debt to its economy since 2008 (roughly the same size as the U.S. banking system), but the day of reckoning has not yet come. The author explains how one-party rule has led to insolvent banks, zombie companies, and ghost cities. Foreign investors in China should proceed with caution as the Chinese economic miracle must eventually contend with its mountain of debt.