Managing debt will be a major issue for Beijing in 2024

CHINA FINANCIAL - Report 28 Dec 2023 by Michael Pettis

Special points to highlight in this report:

* The problem of what to do with the debt will probably dominate economic policy-making discussions in Beijing in 2024. As of now, there seems to be a split between economists, who want to address the quality of economic activity, and non-economists, who are more interested in maintaining the pace of economic activity. A faster pace of economic activity, of course, means lower-quality growth and a faster increase in the country’s debt burden.

* But it is important to remember that debt isn’t the main problem so much as it is a symptom of the problem. The real underlying problem in China is years of wasted investment whose cost hasn’t yet been recognized.

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