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China Uses 15 to 17 Percent of GDP to Pay Interest Each Year

According to an article the Jing Rong Jie (Financial World) website published, during the Tenth Chinese Mulan (Women) Entrepreneur Annual Conference held on April 14 in Beijing, Mao Zhenhua, the Founder and Chairman of China Chengxin Credit Management Company gave a speech in which he stated that, each year, China spends 15 to 17 percent of its GDP to make its interest payments. It is therefore facing an unprecedented economic and financial crisis. As a result, financial risk prevention has become the top priority for the country to deal with. According to Mao, with the large amount of capital injection following the 2008 world financial crisis as well as the country’s strong economic growth policy, China has emerged as the world’s economic power. However, China has also become the country that prints the most money in the world. Almost all the companies in China suffer from a huge amount of debt. Meanwhile China has surplus production and faces the issue that the supply is greater than the demand, as well as the issue of the price level of its stock and its real estate is too high. All of these have created an economic bubble that could lead to a financial crisis and therefore, in 2017, the government took tighter control of the economy. This control is expected to continue over the next few years.

Source: Jing Rong Jie, April 14, 2018