Chinese Individual Savings Deposits Fall in 2017

iFeng: 李扬:去年居民存款增长率首次为负 这是一个危险信号
On April 9th, Li Yang, chairman of the National Financial and Development Laboratory, spoke at the Boao Forum for Asia to discuss China’s leverage ratio. He said that “China’s current leverage ratio has been effectively controlled. It is hoped that there will be further declines under very strong policies in 2018. Therefore, the total debt problem in China is not very prominent. ” However, Li Yang reminded that at the end of last year, the growth rate of household savings deposits was negative for the first time. This is a very If the danger signal continues to develop, Chinese residents may become liabilities, and the problem is big. The US debt crisis in 2008 was because its residents began to indebted.

...Last year, the growth rate of household savings deposits was negative for the first time

...Li Yang believes that the root cause of financial risks is high leverage. He mentioned that last year the National Finance and Development Laboratories launched a quarterly analysis of China's financial risk situation. The data shows that China's overall leverage ratio only rose slightly by about 2.6 last year, which is relatively stable. Since 2008, China's leverage rate has risen relatively quickly. In 2009, China launched a four trillion fiscal stimulus plan. In the same year, China’s credit double-digit increase reached 9.6 trillion, and since then new credit has been operating at a high level. According to China’s financial structure, adding new credit to the company’s hands is all a liability because banks are not allowed to invest, which has led to a continuous increase in China’s leverage ratio. In 2015, the first deleveraging was proposed. Three went down one by one. The third “go” was deleveraging. At the time, no consensus was reached. Therefore, there was no change in 2015. In 2016, it continued to rise and it began to stabilize in 2017. "China's current leverage ratio has been effectively controlled and it is expected that there will be further declines under very strong policies in 2018. Therefore, China's total debt problem is not very prominent."
High debt levels aren't the trigger for a crisis. Debt defaults are often the cause, but not necessary. The only thing needed for a debt crisis to unfold is a slowdown in credit growth. Not negative growth, a slowdown is enough if the initial debt levels are well above the GDP.

This next paragraph is a great insight into how modern state capitalism in both the West and in China is a debt vampire sucking the wealth out of the economy:
Li Yang analyzed that in the three major departments, the enterprise is certainly a debt department, and the government is also a debt department in most cases. So who will support the total debt? The surplus of the residents, this surplus sector supports the other two debt departments, so that the macro economy can run smoothly. “The problem with the United States is that the residents are transformed into a debt department. If the three major departments are all debt departments, economic growth can only rely on inflation. It can only rely on a financial bubble and eventually it becomes a financial crisis. This is what we must be highly vigilant. "We are not afraid of corporate liabilities, nor are we afraid of government debt. We are afraid of residents' debts. The entire increase in economic growth depends only on the central government's release of water. This shows that the economy is highly unbalanced. ”
Government and corporations can pile up debts because they can bail themselves out with the people's savings, but if the people get in on the game and go into debt, GDP growth is entirely a result of inflation. And since inflation comes mostly from credit growth, the economy needs new borrowers. If there are no new borrowers, there is no credit growth. Once peak debt levels are hit, growth stops because debtors want to repay debt (deflation) rather than take on new debt (inflation). Welcome to the depression.

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