China’s Debt Bonfire is a Disaster in the Making

Guest post: China’s Debt Bonfire is a Disaster in the Making by Jonathan Rochford, CFA Portfolio Manager of Narrow Road Capital Pty Ltd

China’s debt bonfire has been building for decades, but recent news and data points to it growing faster than ever with a greater risk of becoming an economy scorching inferno. There’s three key components to this analogy, the wood, the accelerant and the matches.

China’s debt bonfire: The wood

Firstly the wood, which is an ever-growing stockpile of debt that cannot be serviced from profits. As shown below, Macquarie Research found that 23% of bonds issued were by companies...