/ world today news/ A “dangerous debt bubble” has formed in the Celestial Empire, which threatens to burst at any moment, writes Deutsche Wirtschafts Nachrichten. According to experts, China’s hidden debt has already reached 4 trillion dollars. At the same time, if the worst fears are confirmed, the collapse of the financial system in China will inevitably lead to a global crisis, experts warn.
A “dangerous debt bubble” is forming in China, which, according to analysts, may burst in the near future, reports Deutsche Wirtschafts Nachrichten. China’s official debt is currently 270% of the country’s GDP. The foreign debt in 2020 exceeded 2.5 trillion dollars. But many believe that Beijing is hiding the true scale of the crash, specifically the loan rates because they are so important to fueling the country’s infrastructure and housing boom. According to experts, the hidden debt of the Celestial Empire has already reached 4 trillion dollars.
The time bomb is ticking and could go off at any moment, the German publication continues. At the same time, a large part of the loans are taken by the state itself. Economists fear that the collapse of the large investment holding Evergrande can no longer be stopped, and the crisis in the world’s second largest economy will inevitably lead to a global financial crisis.
The World Economic Forum believes Evergrande poses a systemic threat to China’s financial stability. At the same time, the holding is united in a single network with a huge number of subcontractors and other enterprises to which the main builder owes money, that is, there is a large internal and intercompany indebtedness.
Experts believe that “debt contagion” may also spread to hundreds of banking institutions that cooperate with the company. It is possible that the events in the Celestial Empire will affect the price of raw materials in case the demand for them falls due to the delay in the construction work.
Some market experts are convinced that Evergrande’s deepening liquidity crisis will cause serious “ripples” to ripple through the global economy. All financial markets are interconnected, ECB head Christine Lagarde explained. She recalled that the recent events of the Chinese stock exchange affected the whole world. However, according to her, Europe should not suffer much from the possible crisis, but she is not inclined to guarantee the same for the US.
Translation: ES
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