lee wrote on Nov 17
th, 2025 at 2:04pm:
(re the "Atlantic Council"'s Neoclassical assessment of China's economy):
"As the pooh-bahs of the Chinese Communist Party gathered recently to extol their vision for urban modernization, China’s paramount leader Xi Jinping offered an assessment of recent developments that appeared slightly at odds with the upbeat tone of the proceedings. The president said that “(I)n the past, GDP was used to judge heroes,” but “One beautiful thing covered a hundred ugly things. Nowadays, in many matters, one ugliness covers a hundred beautiful things.”
(If Xi is saying there's more to an economy than GDP, then he's addressing an important point.)
Quote:Yet as China’s cities, counties, and provinces confront slower economic growth and fiscal belt-tightening, the leadership didn’t mention the “one ugliness” that is weighing on local governments—trillions of dollars of debt.
(Now we see the 'Atlantic Council's ignorant Neoclassical anaylsis.
Local government debt which has fostered increases in living standards and improved infrastructure without causing inflation can be managed by the Treasury and PBofC, the nation's currency-issuing agencies.)
Quote:That is because the Chinese government already has declared victory over local government debt and seems to be moving on. A three-year debt restructuring initiative launched last November refinances ten trillion yuan ($1.39 trillion) of “hidden debt,” or bonds issued by investment companies known as local government financing vehicles (LGFVs). But LGFV bonds are only one part of a much larger problem. Local governments throughout China are also on the hook for trillions of dollars of bank loans, unpaid bills, and other obligations that remain unaddressed."
(Thank God they "seem to be moving on" (if indeed that is the case); China is currently suffering
deflation after its private housing bubble burst in 2021 (like Japan's did in 1990, after which Japan's economy stopped growing).
And re the supposed inability of LGFVs to deal with a "much larger debt problem": the Atlantic Council isn't aware that:
(google)
Emergence of private banks: Private banks have only been allowed to enter the market since 2015, and in
2023 their market share was still negligible....Private banks can't write-off debt like public banks can, ie, public banks which barely exist in the West.
Quote:....."beijing-extends-and-pretends-to-deal-with-its-mountain-of-local-government
-debt/"
....."pretends" - the erroneous Neoclassical narrative.
Quote:Chinese Politicians climb the ladder because of gigantic Ponzi Schemes, the lower ranks need to keep the lie going. It is what caused the building bubble etc, they got approval, they got finance... from the regional governments.
No, the private sector (but
state-bank-fueled) credit boom caused the bubble, when citizens thought they would get rich quick via investing in private housing.
Xi was remorseful for the CCP's mismagement of the private housing market: "houses are for living in, not investment vehicles".
Now - about Oz's own housing boom.....is an entire generation going to be locked out of home-ownership, forced to become renters in an unafforable private market?
Stay tuned....