Will Chinas Dragon keep roaring or choke on its debt Viewpoint careers advice blog

Will China’s Dragon keep roaring â€" or choke on its debt It never fails to amaze me how fast and far China is developing but will it choke on its debt? My 2013 started in China, seeing for myself the progress of our own business in this exciting, ever-changing country. It never fails to amaze me whenever I visit how fast and far China is developing. Skylines change literally week by week. New infrastructure appears, new products are everywhere. In places like Shanghai, Suzhou and Guangzhou, the trappings of affluence are everywhere, whether they be high-end apartments, luxury branded goods or expensive Italian sportscars. Having created such vast wealth by exporting to the world, people in China are now enjoying the fruits of labour, spending on these items in a way they never have before. With half of all the smartphones purchased in the world last year bought by Chinese consumers, it’s clear that this is a domestic market which will lead the world in many ways. No wonder then that Apple expects China to be its biggest market in the near future. I see these trends in the job world too. Running a large and global recruitment business, the future for skilled jobs in China is of huge interest to me. The job market is hot in many areas as there are simply not enough skilled and experienced people to fill the current demand in many sectors. Put this all together with the latest economic forecasts suggesting that GDP growth will accelerate above 2012’s 7.7% growth rate and it’s clear that the future is very bright indeed. Or is it? The downfall of debt My time in China left me with some nagging concerns. As the world has slowed its consumption, Chinese policy has rightly shifted toward stimulating the domestic market. But when the country’s own National Bureau of Statistics admits that 55% of growth in the first three-quarters of 2012 was consumption-driven, consumerism has overtaken investment as the mainstay of Chinese growth. That’s fine, but where is the money coming from? Increasingly it’s from credit. The People’s Bank of China estimates that in the first half of last year alone, Chinese customers received 400 million new credit cards. It also admits that people are increasingly defaulting on their payments. In the corporate world, there are increasing signs of credit problems too. The collapse of Zhejiang Zhongjiang Holding in Hangzhou under a mountain of toxic debt shows that this is not just a consumer debt issue. So, a combination of miscalculated risk and rampant credit growth across a society traditionally seen as savers. There’s an awful feeling of déjà vu for me in this. Isn’t this the sort of toxic recipe that tipped the world into the financial crisis of 2008, which still rumbles on today? Or has China learned the lessons of recent world history and actually discovered a way to stimulate consumerism while avoiding the catastrophe that hit the Western economies? I don’t know, but your thoughts on this and how a repeat of history can be avoided will be interesting to read. After all, a stable, prosperous and peaceful China is in the best interests of all of us, wherever we live and work. //