[addicted]

China’s borrowing from the future involves more than just debt. And also, the direction of the debt is not as clear as you would think.

For 1, the Chinese have built up unsustainable infrastructure with very limited usage that needs to be maintained. Even if you jubilee away the debts picked up future generations will still be paying for the maintenance of infrastructure that simply doesn’t have the usage to justify it.

For 2, a very significant amount of debt, especially in the property sector, is owed by massive hundred billion dollar businesses to ordinary people who invested their entire life savings into buying an apartment which has not been built. If you forgive the debt, you end up with the poorest people subsidizing the biggest companies in the world.

[toomuchtodo]

You get to the crux of the issue with point 2. China is a nation of savers. They put their savings in real estate with the idea that line would always go up. That real estate value is going to come down, and China will be old. Enough homes for everyone after haircuts are taken, but not much else. China will look more like Japan or Italy in the future.