China is now the world’s second largest economy and for 30 years it has been growing at an astonishing rate. That growth has given the world cheap goods and the potential to sell the Chinese massive amounts of raw materials.
For countries like Australia, the China boom has been great news.
But there is a problem. In recent times, the boom has been sustained by an explosion in lending by banks and so-called “shadow banks”. If the current scale of lending proves to be unsustainable, could that end the boom and result in China becoming the next country to succumb to the impact of unproductive debt?
This week the BBC’s award-winning This World unit goes to China to take a long hard look at the boom, what fuelled it and what would happen if that unproductive debt was called in.
The program clearly lays out how the Chinese leadership responded to the prospect of a global financial crisis and possibility of a world-wide depression. The response focused on a spending and investment program carried out on a scale never seen before in human history. Over the past five years, a new skyscraper has been built every five days in China – along with 30 new airports and 26,000 miles of motorways.
Interviewing key players including former American Treasury Secretary Henry Paulson, former Chairman of the Financial Services Authority Lord Adair Turner and Charlene Chu, a leading Chinese banking analyst, reporter Robert Peston reveals how China’s extraordinary spending has left the country with levels of debt that many believe can only result in an economic crash with untold consequences for the world – particularly resource-driven economies like Australia.
Monday 31st March, 8.30pm ABC1