China Surpasses U.S. as Largest Corporate Debt Issuer

[mota bhai 2,675]

JUNE 16, 2014

HONG KONG — China has overtaken the United States as the world’s biggest issuer of corporate debt.

...

In a study ... Standard & Poor’s, the ratings agency, found that China’s nonfinancial companies had total outstanding bank loans and bonds worth $14.2 trillion at the end of last year, compared with $13.1 trillion in the United States. Moreover, S.&P. expects strong growth in new borrowing and the need to refinance existing debt will push China’s corporate debt levels to more than $20 trillion by the end of 2018, accounting for a third of worldwide corporate borrowing.

S.&P. estimated that one-quarter to one-third of China’s corporate debt is sourced from the country’s shadow banking sector, a murky world of nonbank lending that caters to borrowers who would otherwise struggle to secure financing.

“This means that as much as 10 percent of global corporate debt is exposed to the risk of a contraction in China’s informal banking sector,” the S.&P. analysts wrote in their report. They estimate China’s shadow banking sector debt at $4 trillion to $5 trillion.

China largely avoided the fallout from the 2008 global financial crisis by going on a tremendous credit binge. Officials ordered the country’s state-dominated banks to increase lending, in many cases to infrastructure or vanity projects that have since proved economically unfeasible.

http://dealbook.nytimes.com/2014/06/16/china-surpasses-u-s-as-largest-corporate-debt-issuer/

[GandD 5,966]

Its like bizarro world. In China, private companies answer to the government, in the US, its the opposite.

[mota bhai 2,675]

Its like bizarro world. In China, private companies answer to the government, in the US, its the opposite.

Yes, liberty.

[GandD 5,966]

Yes, liberty.

Result is the same, people with means and all that noise.