China defies IMF on mounting credit risk and need for urgent reform

If you think China's Communist Party fully understands the mess it has created by ramping credit to 200pc of GDP and running the greatest investment bubble know to man, read its shockingly complacent response to warnings from the International Monetary Fund.

The IMF's Article IV report on China states - as clearly as the IMF dares - that excess credit has been pushed to the outer limits of sanity, and that there is a growing risk of an "adverse feedback loop" as the financial system and the economy take each other down in a mutually reinforcing spiral.

bluebottle01:    Frankly my dear, I could n't give a damn.     I must be getting either "older" or "wiser" or just tired of hering the same old stuff.   Media loves crisis.   So let's write it then.    I am sure it will all come out in the wash.    And in any event, before we all panic about the Chinese situation, can we at least try or be seen to try - to put our own house in order? 

rupertmja: I no longer trust anything the IMF says - it has its own agenda.

PaulWeighell: Everyone does.

AngusAttitude: Well, the IMF is run by a fully paid up cheese-eating Eurocrat (again) and is effectively bankrupt of reasons for respect lately. If China wants to stick two fingers up to the IMF then I'm with China. The IMF ceased to be rational as soon as the Euro was 'born'.

usathoughts: Great article. However I want to bring to your attention a situation that makes it a mute consideration. It is rather in your face so please accept my apology.  We need one country to keep Western Civilization alive. Historically as now this falls to England. Sorry, just seems to be the way of it. Europe is too fragmented. Would it not be ironic if the last two nations still standing are Russia and China. This is sure to come to pass if England does not stand up. Think this is over the top? You have but two generations, then it is all over. Just examine the demographics. Regards population, England is already below the threshold of recovery which is 2.1 children per family. How smart do you have to be to figure out the conclusion? All other problems pale in comparison to the above. This must become a national topic of discussion. Seek out politicians that will forcefully address this issue. Keep in mind that as little as 15% of a homogenous group can control a far larger organization. Do I mean to panic you? YES!

London Eye: usathoughts So true,  The Muslim, problem is well understood, by many of the UK population. Problem is, our politicians will not grasp it by the neck and fix it once and for all! Considering the dominant UK religion ( active worshipers) will be Islam by 2025/30 you would think our pathetic leaders, would have a plan, to protect our indigenous society, from the impending civil and social disaster, that soon will befall us! Knowing that 84% or Muslim women and 52% of Muslim men are living on benefits, it does not bode well for our country when millions of new,Muslims flood, in and add to our already bankrupt welfare and benefits burden. The World, may have massive financial problems, but it pales into insignificance, by  the insideous spread of Islam, into every corner of our Globe!

proudtobeatory: If you're worried about Islam becoming the dominant religion, you need to get back into Church each Sunday and start preaching Christianity in the streets and converting the masses. No, I didn't think you would be too keen on that.

London Eye: How do you know!

usathoughts: I can but say spread  the word for your country and mine.

mrpoohead: NUTTER

angermanagement: What a clever repost. Clearly an open mind at work. If that's a reply maybe extinction is a valid option.

RejoiceRejoiceRejoice: 'Do I mean to panic you? YES!' Consider many of us panicked. And, yes, reaching the point of no return. But short of an overthrow of the govt, and its replacement with a hardball anti-immigration administration (which I cannot see happening, the mechanisms of state control are well and truly in place and used to keep the indigenous population pacified), it's hard to see how this disaster might be remedied.

usathoughts: By the way, my posts disappear almost as fast as I can place them. They even caught on to me using replies. Hell, I base my comments on the governments own figures. If I leave off the word, M--s--m I can get by.  Seems to me you already have foreign nationals running a few things. Received a lot of replies. Most with understanding. Even received one from an active US General stating they are well aware of the problem. Glad to get that one. I have a friend outside of  London. He says it gets nasty from time  to time. Keeps me abreast but rather understates most situations. Must be an English trait. If the M--s--m can wreak havoc, an Englishman should be able to raise a 'Hue & Cry'. The reason for my activity and great alarm is that I was not aware of the extent of the problem and how quick is was upon us. Just never before thought to look at demographics.  

mrpoohead: Maybe being a narrow minded bigot is the problem.

usathoughts: With your use of  bigot, the adjective is redundant. You are wise to use 'maybe' as it saves being made into an utter fool. I have a suggestion wherein you shall learn the true meaning of bigot. Pict a Muslim enclave, then walk about for an hour. I ask for a simple condition; wear a visible cross about your neck. I was going to ask you to carry the Bible and preach Christianity close by the central market. DO NOT DO THIS! I am serious, as you put your life in great danger.  THIS REPLY IS MADE SO YOU DO NOT SUSTAIN ANY IDEA OF PROVING ME WRONG BY GOING INTO ONE OF THESE ENCLAVES.

thisaintalbion: This is excellent news!! At last a powerful sovereign nation is telling the IMF -- a global terrorist network second in evil only to the Rothschild's BIS -- to go bleep itself. If only other nations had the guts to do this. If they did, there would be no financial "crisis" and there would be many fewer acts of genocide internationally.

PaulWeighell: "the IMF -- a global terrorist network second in evil only to the Rothschild's BIS" Another day another ludicrously unfounded opinion.

thisaintalbion: PeWe "Another day another ludicrously unfounded opinion." How do you know it's unfounded, since you haven't asked for its foundation? Your arrogant tone serves only to emphasize your sub par thinking. Apparently, you're as ignorant about the IMF as we've already established you are about central "banking," the bank of England and economics generally. Either way, my statement has ample grounds, as anyone familiar with the IMF would know. Let me know if you would like me to provide you with same. Cheers.

foxenburg: Well, the Chinese are no less arrogant that the EU head honchos who to a man insist, against all the evidence, that the crisis is over, the Euro problems are in the past, etc. With everyone else oblivious to reality it's a bit much to castigate the Chinese for behaving likewise. After all, we in the west are supposed to know a thing or two about capitalism.

Antiehypocrite: Funny how we can't find this IMF Leak on the DT - or on any other MSM this morning…  I haven't looked yet but I bet Zero Hedge has it covered… IMF LEAK REVEALS JUST HOW DIRE THE US ECONOMIC DISASTER IS Well, when it comes to desperate governments in a time of economic collapse, there turns out to be a bit of a loophole. And that is that when GDP is reported by the media, what is reported is almost always total GDP - which is the sum of economic activity by the private sector and the public sector. So in looking only at total GDP then, any catastrophic declines in private economic activity can be effectively masked by equally extraordinary increases in public spending - at least temporarily. That obscure little loophole is the hidden-but-real story behind 2009, and every year since. In practice, the difference between the actual government-reported $1.3 trillion collapse in the private sector, and the officially reported $300 billion decline in the total economy, came from federal, state and local governments increasing their spending by a staggering $1 trillion between 2008 and 2009. This resulted in a massive and unprecedented shift in spending as the government soared in size, even as simultaneously the private sector was collapsing in size. So the economy nearly instantly shifted from being 35% government and 65% private, to being 43% government and 57% private – a level which remains in approximate terms true today.So when we look at these fantastic levels of deficits that have been consistently coming in at well over $1 trillion per year, what we have in fact been seeing is the increase in the size of the government from 35% to 43% of the overall economy, in order to maintain the facade of an intact economy. In other words, since the fall of 2008, a substantial chunk of the US economy has been "artificial". The private-sector imploded. It has not recovered to this day. And the great majority of damage containment has been dependent on the United States government running unsustainable deficits, of which it lacks the ability to pay back under ordinary circumstances. If the lessons of Greece do indeed apply to the US economy, then the unfortunate implications are that reducing government spending as a percentage of the economy to let's say 2007 levels might cause the economy to drop not by 5-6%, but by 8% to 10%. This would take the United States straight into an overt depression.And unemployment could go from our current headline rate of 7.6% - with the real full unemployment rate (adjusting for U-6 unemployment and workforce participation rate changes) of roughly 19% - soaring up to a real full unemployment rate of 25-30% or more, which would be a higher level than during the Great Depression.

conservativemind12: Given the fact that the world uses a Dollar standard, doesn't this put the USA in the usually strong position of being able to inflate away their debt, with most of the pain felt across the world as opposed to just at home? It seems obvious to me that with inflation of money (which is just a market value) it makes far more sense to be in debt (at least in their position anyway) than have a large surplus which is constantly being chipped away at like Germany or China, which in turn forces them to invest in perhaps somewhat risky long term ventures.

thebleedinobvious: …which could be another reason why the US continues to print $85 billion per month, to stimulate the inflation they need to pay off their 17,000,000,000,000 overdraft. Or rather, to get the rest of the world to pay it through the export of US inflation.

Oliver Jones: Sounds just like the Roman Empire. Of course, we all know how that turned out, don't we?

daddyseanicus: AEP has been warning of so many different types of  financial Armageddon I have lost count. I suppose the law of averages suggests he may be right eventually. On a much more important point on the madness of warning on lower populations in certain countries (as in article above)but also in the OBR report yesterday on how the UK will need millions more immigrants. Are these people mad??? Will not all these immigrants to the UK not get old. Have we not 8-9 million people of employable age inactive. Are we not increasing retirement age. Are we running out of houses, green belt, food, health provision, money, space, resources. Do we need thousands more criminals, people traffickers, drug addicts, homeless. When will someone in power have the strength of purpose to say ENOUGH.