The Economist has been predicting a Japan style financial crisis in China regularly since the early 90s. They have always been wrong. You'd think they'd update their model of how China works, but they are so bought into the western system of finance that they can never do that.
China doesn't have boom bust cycles because:
1. It has little foreign debt.
2. It has a trade surplus.
3. It prints money to bailout any internal bad loans. It does this politically by picking and choosing winners and who gets bailed out, usually with foreigners getting stiffed.
4. Its bank bailouts do not require issuance of new debt or taxpayer austerity.
5. Banks do not all collapse at the same time because they get fresh new printed money to lend.
6. Anyone at the bank who takes advantage of that moral hazard to lend outside of guidelines gets executed.
7. The banks have very detailed guidelines for how they are to lend such that they are more or less partially privatized central planning.
8. The government regularly issues guidelines to preemptively crush bubbles on purpose by restricting lending to overheated sectors instead of across the entire economy via raised interest rates.
I am not a big fan of the CCP, but their financial system is impressive. That system, by design, has conquered the boom/bust cycle, but western observers refuse to believe this because they are so throughly bought into the architecture of the western financial system and the many billions of words written on the topic of the operation of that system which is based on very different rules that they cannot imagine it could work any other way.
China doesn't have boom bust cycles because:
1. It has little foreign debt.
2. It has a trade surplus.
3. It prints money to bailout any internal bad loans. It does this politically by picking and choosing winners and who gets bailed out, usually with foreigners getting stiffed.
4. Its bank bailouts do not require issuance of new debt or taxpayer austerity.
5. Banks do not all collapse at the same time because they get fresh new printed money to lend.
6. Anyone at the bank who takes advantage of that moral hazard to lend outside of guidelines gets executed.
7. The banks have very detailed guidelines for how they are to lend such that they are more or less partially privatized central planning.
8. The government regularly issues guidelines to preemptively crush bubbles on purpose by restricting lending to overheated sectors instead of across the entire economy via raised interest rates.
I am not a big fan of the CCP, but their financial system is impressive. That system, by design, has conquered the boom/bust cycle, but western observers refuse to believe this because they are so throughly bought into the architecture of the western financial system and the many billions of words written on the topic of the operation of that system which is based on very different rules that they cannot imagine it could work any other way.