Source: Breaking Defense
WASHINGTON: If you want to grow uneasy about the world, read the US-China Commission’s annual report to Congress.
China, while it continues to enjoy robust economic growth, faces a major strategic challenge. Strategically, the biggest threat facing China right now — and the rest of the world given how integrated China is to the global economy — is the risk posed by China’s enormous corporate debt.
The report says that “China’s rapidly rising debt levels heighten risks to the stability of the country’s financial markets, which can quickly spill over into global markets….China’s rapidly rising corporate debt—which stands at 169 percent of GDP—also raises questions about the sustainability of the country’s economic growth. The International Monetary Fund warned in its annual review of China’s economy that China’s rising corporate debt was a ‘serious and growing problem that must be addressed immediately,’ estimating the potential losses from bad corporate loans to be worth 7 percent of GDP.”
The other really intriguing issue, one that may mark a huge shift in Chinese cultural, political and military terms as Breaking D readers know, is the commission’s conclusion “that China is likely to continue to seek opportunities to secure military facilities abroad, such as the one it has begun constructing in Djibouti, to facilitate a range of operations.” As we reported in May 2015, China was pressing hard to secure a base in the remote and tiny East African state that was long a French colony. China has also expressed interest in a military presence in the precarious islands known as the Maldives.