Tuesday, July 05, 2011

China can deal with its sky-high debts - Victor Shih

Victor Shih
China's debts could be as high as 150% of its GDP, higher than that of the US and Greece, says political analyst Victor Shih in Aljazeera. But is should reform its inefficient economy to deal with that debt.

The official numbers of China's aggregated debts vary a lot, but could be as high as 1.65 trillion US dollar. How can the country then still promise to buy up much of the European debt? China's largest problem is not the amount of debts, since it also has a huge deficit with other countries, but the way is has organized its economy, says Victor Shih. "Much of the control has been decentralized to local governments."

Also, much of the economy is dominated by State-Owned companies, who are still making nice money. But when they would default, the burden would be on the government. Lacking financial reform is a bigger problem than the debts, according to Shih.

More in Aljazeera.

Victor Shih is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.
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