On 12 September 2023, at a debate under the aegis of The New Economist, a Chinese think-tank, Nomura Securities China Economist Tin Liu explained how China's mountain of housing-related debt should be looked at. 陆挺：关于当前经济和债务的看法及建议
Amongst others, Mr Liu made the following points -
(a) Debt is not byself a bad thing. Indeed, debt is a necessary conduit to transfer idle or excess savings into growth-ehancing productive actvities and investments.
(b) Unlike Japan's over-indebted "lost decades", China's current debt bubble, though gigantic, has little impact on China's productive manufacturing sector. While Japan's development reached its peak consistent with its limited land size and population, China's growth potential has still a long way to go.
(c) To tackle the current debt and property bubble crisis, the first prioriy is stabilization (which ia already underway). To diffuse the crisis and in the interest of long-term development, future debt should be tied to population mobility, from congested cities to more dynamic second or third-tier cities and prefectures forming closely-knit economic clusters or areas. (See China’s Five City Clusters bring diversified real estate investment opportunities) *
(In 2015 China’s 11 largest city clusters accounted for one-third of the country’s population and two-thirds of its economic activity, according to the Asian Development Bank. Meanwhile, The Economist reports that the 19 city clusters account for nine-tenths of the country’s economic activity.)
* China's dynamic "city clusters", regions of massive urban conurbations on the eastern board and inland, are now linked by the nation's 35,000 km of highspeed rail, more than the rest of the world combined, which is set to double by 2035. China is leading in 37 out of 44 critical technologies of the 21t century, according to a Marfch 2023 study of the Australian Strategic Policy Institue (ASPI). This is supported by China's massive high-end technological human capial. By 2025, Chinese universities will be producing more than 77,000 STEM PhDs per year compared with approximately 40,000 in the US. Together with robotics, extensive farming mechanization, and ubiquitous digitization, China's economy has a long way to go. See Myth of ‘Peak China’ is overexaggerated and misplaced idea
