Beware The Chinese Debt Dragon

People often talk about eating Chinese and being hungry half an hour later.  China just miraculously met market expectations for GDP growth in the last quarter at 6.7% annualised.  The markets gave a collective sigh of relief on Wednesday as the much feared ‘hard landing’ appears to be avoided.  But in a common theme in global economics at the moment, that annualised 6.7% GDP growth came courtesy of 20% debt growth over the same period.  So it took $3 of debt to get $1 of GDP growth.  Did you hear that on the news Wednesday??  Didn’t think so…  In September alone China added, wait for it…$330 billion (a third of a Trillion) in debt.  Check out this graph: