Michael Pettis: China's Economic Growth Model Is Dying
Forward Guidance
Pattern in Economic Growth and Debt Accumulation
The pattern observed in economic growth and debt accumulation in several countries follows a similar trajectory - rapid growth in the 1950s and 60s, followed by a period of debt explosion due to productive investment. However, post this phase, debt continues to grow rapidly while GDP growth slows down, leading to a significant increase in the debt to GDP ratio. This indicates that the investment made is non-productive, resulting in a high debt burden compared to economic growth.
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