In this month’s BCA webcast I moderated a round table with my colleagues Peter Berezin (Global Investment Strategist), Arthur Budaghyan (Emerging Markets Strategist), and Yan Wang (China Investment Strategist) discussing the global macro and market implications of China’s rising debt burden:
1. What implications does a country’s savings/investment balance have for credit growth? Do credit bubbles originate from high national savings?
2. The world is climbing a wall of worry about China’s debt load and the pace of its domestic credit growth. Are these concerns justified? How worried should we be about the misallocation of capital in China?
3. What are the investment implications of China’s debt profile for global financial markets? Is rampant capital flight still a risk for the RMB?
4. What signposts should investors watch to determine whether China’s macro outlook is evolving in either a constructive, benign, or ominous direction for the global economy and financial markets?
The focal point of the view cleavages on China within BCA centers on how analysts interpret the relationship between savings, debt, and the ensuing implications for the allocation of capital. Links to the special report and webcast (enclosed) elaborate on how these issues inform the macro and market outlook for China and beyond.