Could Mainland China’s Ticking Debt Bomb Destabilize The Global Economy?

Some economic pundits say that debt is just a manageable byproduct of an ongoing economic boom, but could Mainland China’s looming “debt bomb” destabilize the global economy this 2018?

By: Ringo Bones

To anyone familiar with modern economic science will also be familiar with some “Keynesian economic pundits” stating that debt is just a merely manageable byproduct of a booming economy, but could the massive debt pile – often called “Mainland China’s ticking debt bomb” – that is a byproduct of the economic boom that created the world’s second biggest economy the trigger that could destabilize the global economy this 2018? But first, here’s a brief history on how Mainland China’s public and private debt grew to such monstrous proportions as to scare a significant number of economic pundits who just recently acquired a semblance of confidence on the direction of the global economy. 

Back in 2007, around the time when Mainland China overtook Japan as the world’s second biggest economy, both public and private debt stood at around 6-trillion US dollars. Ten years later, the Mainland Chinese public and private debt reached 23-trillion US dollars. What worries some economic pundits the most is not mainly the monstrous debt size but the slowdown in economic growth since the end of the first decade of the 21^st Century as Mainland China moves from a developing to a developed economy. Because Mainland China is now a main driver of global economic growth, the solution to the country’s ticking debt bomb is now everybody’s concern. 

Weaning the nation off that debt without intensifying its ongoing economic slowdown can be tricky. Despite Mainland China’s growing by 6.9-percent in 2017 beating the government target of 6.5-percent growth forecast, it is a mere shadow of the 10-percent or more annual economic growth the country experienced during the middle of the first decade of the 21^st Century. Cleaning up the nation’s banks is one approach. Propping up borrowers to prevent defaults is another, but propping up borrowers could leave the country mired in bad debt and make it susceptible to years of economic stagnation like what happened to Japan that started back in 1991 which it has just more or less recently recovered.     

Will Mainland China Make Rare Earths Even Rarer?

As Beijing decides to secure their own strategic supply of rare earth metals would this result in making rare earths even rarer?


By: Ringo Bones


Even though the literal “rarity” of rare earth metals is a misnomer – the rarest one is only slightly rarer than iodine – recent geopolitical developments in Mainland China and the surrounding region might possibly make the oft-perceived rarity of rare earth metals a “literal” possibility in 2011. As of January 6, 2011, the Beijing government has decided to reduce their rare earth metal export quotas by 35% for the whole of 2011.

Beijing’s decision recently became another concern for Japan’s very rare earth metals dependent high technology manufacturing sector which provides virtually all of the world’s supply of electric motors for hybrid cars, video display panels and other newfangled systems to generate electricity in an environmentally-friendly manner. Beijing’s recent decision to curb rare earth metal export quotas has even spurred on Japan to further step-up their own on-going seabed exploration in the search for commercially viable rare earth metal ores.

Even though Mainland China currently supplies 97% of the world’s rare earth metal needs, their need to secure their own strategic supply of rare earths has recently become an inevitable necessity after recently becoming the world’s number one manufacturer of wind turbines and plans to build scores of nuclear fission power plants in order to reduce their overall greenhouse gas emissions. Looks like other countries with commercially viable rare earth ores in their territories has now got a very good reason to step-up their own rare earth metal mining and processing industry given the People's Republic of China's decision to reduce their 2011 rare earth export quotas by 35%.