Michael Pettis: China's Economic Growth Model Is Dying
Forward Guidance
The Debt Levels in China
In China, the distinction between private debt and public debt is much less important than it is in the US because moral hazard underpins the banking system. The huge US deficit has to be met with rising debt because the US deficit basically is a reduction of domestic demand. And that's not an accident that you see debt levels on both sides of the imbalances rise very quickly. We saw this in the 1920s. What we're seeing today is no different. But somehow or the other, you need rising debt to keep growth from slowing.
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