China Builds 27 Empty New York Cities

You would have to do some fast talking with the Chinese banks of the sort Trump managed with New York banks decades ago during the S&L crisis.

Your only hope of avoiding being sucked into a black hole of debt defaults would be to hire some creative scoundrels disguised as accountants to help you persuade the banks to lend you additional billions to postpone the day of reckoning.

Your assets wouldn't be enhanced in any way by being encumbered with additional debt; they would just become more costly.

The correct answer depends on China's actual debt level.

Unlike Trump's challenge of three decades ago when the systemic debt issue was denominated in billions of dollars, the Chinese bad debt problem is 1,000 times worse.

Forbes reports the estimate of professor Victor Shih of the University of California-San Diego, who believes that Chinese official debt figures have proven woefully inadequate.

In 2017, Shih put total Chinese debt at 328 percent of gross domestic product, therefore $45.9 trillion.

Professor Christopher Balding of Peking University's HSBC Business School, an authority with good sources in the People's Bank of China's Financial Stability Board, recently did some subversive arithmetic combining "On balance sheet assets" with "Off-balance sheet assets." Remember, while debts are liabilities to the borrowers, they are assets to the lenders.

The National Development and Reform Commission says Chinese debt amounts to 260 percent of GDP, while the International Monetary Fund accepts a lower official estimate of 230 percent.

Speaking of "Shocks," you shouldn't be shocked to learn that Balding was fired from his post at Peking University after discussing his conclusion-based on PBOC data-that total debt in China has surged to 833 percent of nominal GDP. In a corrupt world, where people have trillions of reasons to lie about the economy, the firing of professor Balding is as close as you can expect to come to official confirmation that his numbers are correct.

Estimates of bad debt in the Chinese banking system run as high as 50 percent of GDP-or about $7 trillion.

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