Ranking of a few of the world's largest countries' bank assets at end-2016:
USA $16 trillion
USA $16 trillion
Eurozone $31 trillion
Japan $7 trillion
and China's $33 trillion! (Lo and behold, this figure is said to be underestimated, as with everything that pertains to China) By the end of 2017, the assets are expected to increase to a whopping 37 trillion. China just announced that its targeted GDP growth for 2017 is 6.5%. For sure it will achieve this number but at what cost?
In the same context, 3 of the largest banks in the world are now China-owned.
Somehow, the above superlatives sound a bit hollow because it is just all these money sloshing around and nothing else. There are no key drivers such as productivity, innovation, etc. The result is the chunk of money transfers from one bubble to another. it is no stretch of imagination that the China government was trying to enrich the economy and the wealth of its population by handing out tons of money. However, the money was leaking out of the country and did not benefit the country nor its people. A lot of it was wasted. Now that China is trying to stop the leakage via capital controls, this money will be trapped within the country thus aggravating more bubbles within the country. China has created a money monster which it can't control.
At some point, something has to give. Nobody knows the impact within China but I think the rest of the world will certainly be on the receiving end of it. It is easy to prepare for the worst knowing how worse is going to be but this is one worse that is going to be big and outside of imagination.
and China's $33 trillion! (Lo and behold, this figure is said to be underestimated, as with everything that pertains to China) By the end of 2017, the assets are expected to increase to a whopping 37 trillion. China just announced that its targeted GDP growth for 2017 is 6.5%. For sure it will achieve this number but at what cost?
In the same context, 3 of the largest banks in the world are now China-owned.
Somehow, the above superlatives sound a bit hollow because it is just all these money sloshing around and nothing else. There are no key drivers such as productivity, innovation, etc. The result is the chunk of money transfers from one bubble to another. it is no stretch of imagination that the China government was trying to enrich the economy and the wealth of its population by handing out tons of money. However, the money was leaking out of the country and did not benefit the country nor its people. A lot of it was wasted. Now that China is trying to stop the leakage via capital controls, this money will be trapped within the country thus aggravating more bubbles within the country. China has created a money monster which it can't control.
At some point, something has to give. Nobody knows the impact within China but I think the rest of the world will certainly be on the receiving end of it. It is easy to prepare for the worst knowing how worse is going to be but this is one worse that is going to be big and outside of imagination.