Japan’s descent into stagnation is an infamous economic tale known around the world. But at its start, in the early 1990s, it wasn’t abundantly clear what was happening to what was then the world’s No. 2 economy.
Much to the frustration of Japan’s Ministry of Finance, there was a coterie of keen financial analysts who warned that the country’s debt problem was a whole lot worse than advertised, and that economic growth wasn’t going to magically make it go away.
Fast forward to today, and something similar may be emerging with regard to China. In recent weeks, China watchers have taken notice of a previously little-publicized assessment by a former adviser to China’s central bank. Li Daokui has estimated that local Chinese authorities had by 2020 run up a much bigger tally of debt than previously realized, at some 90 trillion yuan ($12.6 trillion).
I, being poor, have only my dreams; I have spread my dreams under your feet; Tread softly because you tread on my dreams.