Has China Reached its Debt Limit?

by Daniel Fernández Méndez

Half of the world´s economies (emerging and the developed) are seeing a slowdown in their economic growth. This could potentially be a sign of a new global crisis. Are we at the doorstep of a new global recession?

We have already reported in a previous article and in our reports that there exists little risk of a global recession. This time the analysis will take in account the debt accumulated by the private sector (households and businesses).

Usually, recessions stem from an economic boom marked by an enormous increase in credit extended to the private sector, however, credit extended to private sectors in the leading economies of the world has not seen recently a significant increase. This situation goes in clear contrast with that of 2007. The obvious exception is China, which sees huge growth in credit extended to the private sector.

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