Is China's Success Real?

I keep looking at all the wonderful things being achieved by China in such a relatively short period of time. I see blogs on the internet talking about China's infrastructure being far superior to anything in the West. I hear about the achievements having occurred at unbelievable speed. Then I wonder, if it was that simple, why didn't any Western country do the same? Possibly because they weren't big enough? Some might say they never had the perfect political and economic structure in one country. Maybe...

Then I look at the debt China has accumulated. They have a GDP of $18 trillion US. If you listen to Kyle Bass, who claims to have studied the Chinese financial system closely, China's debt is 350% of GDP. That's almost $70 trillion US. Who owns that debt? When is it due? Can it be peacefully rolled over? Is the CCP pretending to be successful, but hiding behind promises they can't possibly keep? I've heard that by 2035 China's pension system will be broke. Is that who they owe the debt to?

Since the Chinese administration runs inside a black box, we can't know when promises are due. We can't know if those debts can be rolled over. We can only look from the outside, and things seem okay. But what if they weren't? What if the parties owed the $70 trillion said, global interest rates have risen. You now owe more. Can you pay? What if China said, "We are an authoritarian state. We will pay you when we are ready. And we will pay you what we think is fair." What would happen? Would China default? Or would they threaten the creditors? Time will tell because all debts fall due. We just don't know when. Unless they can extract wealth from improving productivity, they might just print money. That would be a lot easier to do if they were the new Reserve currency. 

Otherwise, they may need to default. How would you know if China needs to default? All their figures are rubbery. They don't even know how many people live in their country. Imagine if China became the leading economy in the world based on a pack of rubbery figures. How insane would that be? 

These are just thoughts I have because what China is doing just doesn't seem to financially add up. Surely, if a Western Government wanted to keep getting re-elected, they would spend like the Chinese do. It just doesn't make sense to me. In any Western economy, if a semi-government corporation was making a consistent loss, it would get shut down quickly. No zombie corporations would be allowed. How is it that China can get away with this?

To put things in perspective, Japan owes around 200% of its GDP in debt, and people are wondering, how is that sustainable? The USA owes $40 trillion, and the Americans are panicking. But their GDP is around $32 trillion. And they are the Reserve currency. So they have built-in protection. 

So am I missing something here, or is the world being fooled? 


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