China's banking system is flashing a red warning signal
Earlier this year, George Soros said that China's debt expansion "eerily resembles what happened during the financial crisis in the US in 2007-08, which was similarly fueled by credit growth."
And the warnings are getting more insistent.
The Bank for International Settlements in Basel, which is a global organisation of central banks, released data showing just how dangerous China's debt bubble is becoming.
The BIS said that China's credit-to-GDP gap now stands at 30.1%, the highest for any country since data was collected in 1995.
The measure describes how fast credit has been growing in a country, and is an early warning signal for financial crises. It displays the difference between a country's debt-to-gdp ratio and the long-term trend. The BIS said anything above 10% needs attention. On that basis, Canada is also entering into dangerous territory.
Here is the chart:
BIS
And here is the BIS (emphasis ours):
"Despite the slowdown in cross-border credit in late 2015 and early 2016, a number of countries still showed signs of strongly above-average domestic credit growth, which could sow the seeds for potential financial strains.
According to the BIS early warning indicators, which are intended to capture financial overheating and potential financial distress over medium-term horizons, credit growth continues to be unusually high relative to GDP in several Asian economies as well as in Canada."
- In second consecutive week of decline, forex kitty drops $2.28 bn to $640.33 bn
- SBI Life Q4 profit rises 4% to ₹811 crore
- IMD predicts severe heatwave conditions over East, South Peninsular India for next five days
- COVID lockdown-related school disruptions will continue to worsen students’ exam results into the 2030s: study
- India legend Yuvraj Singh named ICC Men's T20 World Cup 2024 ambassador
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market