"Let's say China actually did grow 7 percent between April and June. That's still markedly slower than the 12 percent jump in corporate and household borrowing last month. All that borrowing limits the ability of companies to increase employment and consumers to spend. Outstanding loans for companies and households are now a record 207 percent of GDP (and growing fast), compared with 125 percent in 2008."
"waning Chinese demand has resulted in falling global prices for everything from oil to metals to milk. Those problems will be amplified if China begins exporting deflation to the region. Japan, which still has yet to beat its own multi-decade bout with falling prices, is particularly vulnerable, as is South Korea.
The People's Bank of China can always cut interest rates. (Its one-year benchmark rate is still 4.85 percent.) But amid cratering growth, rate cuts might just exacerbate the debt troubles of Asia's only engine of economic growth. In other words, it seems safe to say the hedge fund managers have it right: If China doesn't count as a systemic economic risk, what does?"
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It's pretty simple: without new debts, the end-demand based on current wages doesn't justify the existence of the jobs we have today.
http://www.bloombergview.com/articles/2015-07-16/if-china-isn-t-a-global-risk-what-is-
"Let's say China actually did grow 7 percent between April and June. That's still markedly slower than the 12 percent jump in corporate and household borrowing last month. All that borrowing limits the ability of companies to increase employment and consumers to spend. Outstanding loans for companies and households are now a record 207 percent of GDP (and growing fast), compared with 125 percent in 2008."
"waning Chinese demand has resulted in falling global prices for everything from oil to metals to milk. Those problems will be amplified if China begins exporting deflation to the region. Japan, which still has yet to beat its own multi-decade bout with falling prices, is particularly vulnerable, as is South Korea.
The People's Bank of China can always cut interest rates. (Its one-year benchmark rate is still 4.85 percent.) But amid cratering growth, rate cuts might just exacerbate the debt troubles of Asia's only engine of economic growth. In other words, it seems safe to say the hedge fund managers have it right: If China doesn't count as a systemic economic risk, what does?"
-----------------------------
It's pretty simple: without new debts, the end-demand based on current wages doesn't justify the existence of the jobs we have today.