The impact of debt in China


The misfortunes of the Chinese industrial town of Zouping illustrate problems that China’s large debt load may cause. After local companies guaranteed hundreds of millions of dollars of one another’s loans, the loans went bad, businesses closed, and the impact was felt throughout the city. Although spending has led to significant growth for the Chinese economy in recent years, debt in China has expanded twice as quickly as the overall economy over the last nine years, the New York Times writes. The overall size of the Chinese economy – which is second in the world only to the United States – gives the country muscle to address financial crises, but economists are concerned that debt will be a heavy burden for China.

Read more in the New York Times >