
Ask HN: Discuss China, global debt and what if it fails - NicoJuicy
Since i&#x27;m starting to get worried about China&#x27;s expanding power. Here are my 2 cents, i&#x27;d like to hear yours.<p>My opinion is that China has been artificially inflating their annual growth to 8% annually.<p>First, there were easy loans to do this. People can borrow money for building buildings. The mortgage is the building itselve.<p>What happened, the buildings are never completed ( 50% ) and the rest of the money goes to the owner. The bank takes the unfinished building and it just stays unfinished.<p>They do other things of course, but since the annual growth of 8% is always met. There is no collapse.<p>Now, China is expanding globally to do the same. They give loans to countries ( expecting them not to be able to pay back) for creating infrastructure there. In return, they receive monopolies when the loans can&#x27;t be paid back ( much bigger debt for China).<p>BUT: the annual growth is met, while expanding their power.<p>Now i&#x27;m starting to get worried. China already has a lot of influence, but they can&#x27;t go further than what they are doing now.<p>What happens when the entire structure collapses? Have they gotten too big to fail? Or too big to save?<p>How do i protect my ( European) money if this happens?
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T-A
Your annual growth figure is old (the official number is now around 6.5%;
apply generous amounts of salt as usual), but your concern is even older. Read
this, and note the date:

[http://www.economist.com/node/125768](http://www.economist.com/node/125768)

China has had a non-performing loan problem almost as long as it's had a
(pretense of a) market economy. Confused Westerners look at those numbers and
interpret them as they would in a Western economy, apparently forgetting that
in China, even being a billionaire won't protect you from being disappeared at
the rulers' convenience. Getting bailed in, i.e. having your claims on some
bank or SOE "legally" declared null and void (remember, there is no
independent judiciary in China), is far from the worst thing that could happen
to a Chinese lender.

Can such a system "collapse"? Unlike Venezuela, China is not ruled by a former
bus driver; it's a technocracy run by reasonably intelligent people playing a
long game. It's oppressive and inefficient, but it has the ability to forcibly
redistribute even severe pain. Collapse, in the usual sense of abrupt change,
would require something like a new political revolution. Hence the steady
ratcheting up of central control. They are definitely not going to repeat
Gorbachev's "mistake".

What you do? If you are really worried about this, you don't lend to or invest
in entities which are significantly exposed to China. If you are _really_
worried about it, you look for ways to short them (oh look, a Tesla factory in
Shanghai?).

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random-username
What happens when the entire structure collapses?

please just retrospect the history of other countries

