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China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle

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4.15  ·  Rating details ·  579 ratings  ·  72 reviews
A stunning inside look at how and why the Chinese economy is barreling towards disaster and the impact its collapse would have on the rest of the world
ebook, 288 pages
Published March 13th 2018 by Houghton Mifflin
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Average rating 4.15  · 
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Start your review of China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle
David
Jan 27, 2018 rated it really liked it  ·  review of another edition
Shelves: read-econbiz
“Markets can remain irrational a lot longer than you and I can remain solvent”, a quote persistently misattributed to the economist John Maynard Keynes, seems the most appropriate comment for this book.

Like a strapless dress, the Chinese economy shouldn’t stay up, but it stays up. The Coming Collapse of China (widely read at publication) predicted the end of the bubble in 2001, and then again in a revised edition in 2012, yet there the bubble still is with us in 2018, big as life and twice as
...more
Rahul  Adusumilli
“The Chinese Communist Party made a deliberate decision in the late 1990s to build the biggest steel industry in the world, even though China lacks most of the things you need to make steel—namely raw materials and affordable energy,” said Jim Darsey, executive vice president of Nucor Corporation—the biggest steelmaker in the United States—in a submission to the U.S. Congress. In 2015, the U.S. steel industry lost twelve thousand jobs. That year, facing massive overcapacity problems at home, ...more
Marks54
Apr 04, 2018 rated it really liked it
This is a critical and more popularized (nontechnical) account of recent development issues in the Chinese economy. The focus is on the Chinese parallel to the problems with the US financial system leading up to the 2008 crash and the Great Recession that followed it. China, of course, is different in aspects that ultimately stem from developments in the US and Europe. State control of the economy is stronger and it is used to permit and even encourage the use of more and more lending to keep ...more
David Wineberg
Feb 28, 2018 rated it it was amazing
The gigantic difference between China’s Great Wall of Debt and everything else you read about China in the financial press is this comes from decades of following developments from the inside. Whereas news items offer financial analysis, ratios, percentages, projections and bottom lines (none of which can be trusted), Dinny McMahon derives insight from repeated personal visits, interviews and knowledge of current affairs as a financial reporter for pretty much all his adult life. An Australian ...more
Kate Vane
Feb 25, 2018 rated it really liked it
I have to admit that my understanding of the contemporary Chinese economy is limited to a few media cliches which portray China as simultaneously threat and saviour. They are taking our jobs. They are buying up our strategic assets. They are making friends worldwide while the West makes only enemies. They are a nation of savers, not borrowers. Their investment keeps our fragile economies afloat. Chinese consumers will save us from our next recession.

This book presents a more realistic appraisal
...more
Bettie
Description: A stunning inside look at how and why the Chinese economy is barreling towards disaster and the impact its collapse would have on the rest of the world

The premise of this is opposite to Destined for War: Can America and China Escape Thucydides’s Trap?,where Allison's pov is more perplexing to the rest of the planet's equilibrium.

Popped this into the larder and will re-visit when Javanka's case comes fully into focus. At this point, I really do feel sorry for the average Joe citizens
...more
Debjit Sengupta
Oct 23, 2018 rated it really liked it
Last few years, I have come across few economic journals which highlights China’s meteoric rise over the past half century. The nation is pinned as an exemplar about the impact of opening an economy to the global markets. One of the major defining moment was in 1978 where groundwork was laid for future reforms. Soon they shifted from collective farming to the household responsibility system. This was immediately followed by allowing foreign capital to enter China, thereby boosting regional ...more
Jason
Apr 20, 2018 rated it really liked it
Dinny McMahon China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle is an engrossing, and well-researched examination from a variety of perspectives on how the Chinese economy has functioned and grown so fast, and the increasingly hard to ignore challenges it faces in the future.

This book is a great example of an extended journalist piece. Many different stakeholders, from senior politicians, nouveau business executives, Australian marketers of
...more
Jonathan Yu
May 13, 2018 rated it really liked it
It’s a good book that gives an accessible overview of issues within the Chinese government. Despite the title it’s sober and does not claim to make predictions of imminent collapse. I find this book well worth reading for an understanding of today’s and tomorrow’s China.
Alex Givant
Nov 05, 2019 rated it it was amazing  ·  review of another edition
Shelves: audio, china, economy
There are some books that you read and more or less can grasp idea of what is going on. This one is book about machine with 1.5+ trillion moving parts - more you read, less you understand. Looks to me like China is huge Ponzi scheme which is keep going as long as the government willing to play the music. To get successful in China means taking bold and aggressive steps and when shit hit the fan - the governments (people's taxes) will be responsible to bail you out. One idea that book clearly ...more
Justin
Jun 04, 2018 rated it really liked it
Shelves: money
Well written and informative. The author seems to have done their research.
Mark McCormick
May 05, 2019 rated it it was amazing
glad I got out when I did, lol.
Sophie Guo
Nov 10, 2018 rated it it was amazing
The best book I've read on the topic: spot-on analyses on the roots of China's economic and financial problems. Unbridled and ever-expanding money supply combined with the financialization of the economy creates huge asset bubbles and poses huge risks for the entire economy.
Dan Hyer
Sep 13, 2018 rated it it was amazing
I just finished China’s Great Wall of Debt – Shadow Banks, Ghost Cities, Massive Loans and the end of the Chinese Miracle, by Dinny McMahon (212 pages).

The book isn’t nearly as apocalyptic as its title suggest. It’s written by a Wall Street Journalist who spent 10 years in-country.

As you would expect from a book by a journalist, the book is supported by many anecdotes and examples. It is long on stories and short on data and analysis that you would expect from someone if instead they were an
...more
Randall Harrison
Aug 04, 2018 rated it really liked it
Shelves: china
I've spent a lot of time lately reading about China. This book is one I'd recommend highly. McMahon gives us good reason not to fear China overtaking the US as the economic superpower of the late 21st century. However, he also gives us good reason to fear what will happen if China fails to address the problems inherent in its economy successfully.

China can't sustain the economic growth rates of the last few decades without incorporating "smoke and mirror" policies which McMahon describes in
...more
Aaron Michaux
Jul 16, 2018 rated it it was amazing

In general, books on China are either bullish, or sneering. Not so here. Dinny McMahon details some of the extraordinary challenges facing the world's biggest nation, and questions the inevitability of China's ascendancy. The culture of corruption and entitlement is far in excess of anything I imagined; however, don't count the communist party out yet. Xi -- the chairman of everything -- is consolidating the type of dictatorial power that could possibly produce needed reforms. Or perhaps not.
...more
Frank Chen
Apr 14, 2018 rated it it was amazing
Well told, carefully researched story about how China's debt powers their economy. Their system of allocating capital to companies is very different than ours, and understanding how money flows and what incentives are attached to that movement helps you understand the rapid growth of China as an economic superpower. The book also illuminates the limits to future growth and warns of a future reckoning when "kicking the can down the road" simply won't work anymore (as with Medicare and Social ...more
Howard Granger
Sep 02, 2018 rated it really liked it  ·  review of another edition
Comprehensive but succinct guide to the Chinese economy

Like most miracles, China's economy turns out to be a mirage. Pump-priming to the max is like a gym junkie taking steroids. Looks good on the outside but rotting on the inside. Excellent read. Breaks down complicated concepts into understandable chunks. The real life experiences of the people he uses to flesh out the material are compelling and help you get the ideas he puts forward.
Abhishek Anbazhagan
Jan 15, 2019 rated it really liked it
While the title is click-bait, the book is far from that. Dinny McMahon, a former WSJ journalist has written a revealing portrait behind the rise and ever continuing ascendance of the Chinese economy. The book talks in great depth and with sources about the enormous amounts of leverage behind China's growth story. In other words, debt is what is most central to the China story. While the west likes to critic that China is not innovative and only seeks to copy to emulate, the level of innovation ...more
Tõnu Vahtra
Jul 26, 2018 rated it really liked it
The title seems to be more dramatic than the book itself, it focuses on the real fundamental risks but does not claim that he crisis is already here or that it is inevitable.

The following topics are discussed in the book:
*Exponentially increasing debt (mostly from state-owned companies)
*Shadow banking and how risks for banks are decreased by the government
*Zombie-banks funding zombie state enterprises, that are kept afloat to preserve stability in the society
*Income inequality
*Seizure of land
...more
Liam
Aug 29, 2018 rated it it was amazing  ·  review of another edition
"[B]etween 2001 and 2009, China's state-owned firms collectively generated profits of 5.8 trillion yuan. But if those companies had paid market rates for items like land, credit, water, and electricity, and hadn't received any cash subsidies or tax rebates and holidays, there would have been no profit at all." (38)

"According to Qiao Runling, the deputy head of the China Center for Urban Development, in 2013, plans for new cities and new districts were sufficient to house about 3.4 billion
...more
Richard
This book delivered somewhat less than I hoped for, but to be fair, I think the author lived up to the book title. He describes his view of the current economic situation in China and what lead them to where they are now. What I wanted was more prognostication. The tone started out somewhat more dire than it ended up, at least by my reading.

McMahon is a financial journalist. Every now and then I had to slow down and reread passages to make sure I got what he was saying. Among my takeaways are
...more
Rajat
Oct 26, 2018 rated it really liked it
In the larger concern, the issue of China's debt escapes most minds. A supply-driven economy that has accumulated a lot of debt and has given rise to ghost cities, underperforming industries and substandard production is the elephant in the room no one seems to be talking about. China's situation is even more precarious as it sees any reform to resolve this predicament to be politically tenuous.
Lending by state-owned banks to state-owned companies, absorption of bad debt accruing through such
...more
Gestion d'actifs Burgundy
Review by Vida Guido

China’s Great Wall of Debt sheds light on the unsustainable level of debt used to finance the
Chinese economic growth, and its far-reaching consequences abroad.

Dinny McMahon spent more than a decade covering China for the Wall Street Journal. In China’s Great Wall of Debt, the author breaks down the elements at play behind the Great Wall. He paints a detailed picture about the extent to which debt plays a role in the "trading space for time" strategy in force in the country.
...more
Atul
Sep 11, 2019 rated it it was amazing
Excellent book, it effectively digs beneath the hype about China’s supposedly superior state-led model of capitalism and shows the reality lurking beneath the surface: shadow banks, ghost cities, massive loans, a huge real estate bubble, the most rapidly aging population in the world, entrenched corruption, a high chance of being ensnared in the middle income trap, etc.

While China’s growth has undeniably been historic and very beneficial to most of its population (hundreds of millions lifted
...more
Rob
Oct 15, 2019 rated it it was amazing
Fascinating insight into how China's economy interacts with its national and local governments, and the fragility that is a result of structural flaws.

News reports in 2019 have addressed China's national government's efforts to reign in unregulated lending fueled by the people's entrepreneurial ambitions and increased the required reserves of their banks to reduce the risk of a financial crisis, only to turn around and do the exact opposite in order to stimulate a slowing economy to prevent an
...more
Gayatri
Aug 15, 2018 rated it it was amazing

This book addresses China's economic boom and the repercussions arising from it and the long standing effects that China's fast paced growth has had on the global market. This book is great for someone who harbours an interest in Economics, and specifically the miracle that is the Chinese Economy/Market. Dinny McmAhon talks about how the Chinese economy is balanced precariously on a tightrope, and how although the economy has beensustained through exports, an increase of 12 million dollars in
...more
Hallie
Sep 01, 2018 rated it really liked it
Great book - it balances well to provide more than just a surface level explanation of the current state of China's economy and nuances of business dealings there, without diving into too much detail and research for the average layman. The title of the book deals with debt, but it's more than that - it speaks to business practices and expectations that have become norms as they have been in place and solidified over the course of years. For me, it was also an eye-opening read in that I am ...more
Vineet Tandon
Jul 09, 2018 rated it did not like it
Frivolous. Unconvincing. Confused. Zero big picture or any picture .... !!!

Too casual and lazy an attempt to be be taken seriously as - 'non fiction'. No theme or story to be taken as - 'fiction'. Those who compare this to Micheal Lewis do great injustice to Lewis. This does not even come close in the most the amateurish of ways. An insult to him actually .... !!!

Written by a reporter who keeps contradicting himself on almost all the points he makes as the book progresses. This is the only
...more
Mark O'Connor
Jun 04, 2019 rated it it was amazing  ·  review of another edition
Chinas Economic Troubles Abead

It was amazing to read about how the Chinese economy works, usually against lower classes. It was interesting to see how state run industries create overcapacity and harm the west (and the Chinese. Much of their pollution comes from overproduction of steel, concrete and aluminum. It helps put the USA China trade war into a sharp perspective. The Chinese DO NOT PLAY FAIR. THEY STEAL ANYTHING THEY CAN GET FROM EUROPE AND THE USA. ITS TIME TO END THEIR PRACTICES AT
...more
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Dinny McMahon spent ten years as a financial journalist in China, including six years in Beijing at The Wall Street Journal, and four years with Dow Jones Newswires in Shanghai, where he also contributed to the Far Eastern Economic Review. In 2015, he left China and The Wall Street Journal to take up a fellowship at the Woodrow Wilson International Center for Scholars, a think tank in Washington ...more
“...government meddling makes China's economy incredibly opaque, not only to foreigners but to the Chinese as well. But this control of information—be it the massaging of data, faking it outright, turning a blind eye to its misreporting, rationing its publication, or cutting off its availability—is not the root cause of China’s opacity. It is merely a symptom. What makes China so opaque—and, indeed, what gives the government such control over information in the first place—is that its rules are fluid.” 0 likes
“The Chinese economy is exceptional…Rather than being immune to crises, recessions, and funks, it’s unique in that Beijing is willing and able to intervene on a scale that allows it to postpone a reckoning indefinitely, albeit at the cost of storing up greater pain for the future…China’s authorities have an unparalleled capacity to kick the can down the road. But with every kick, the can gets bigger and doesn’t go as far.” 0 likes
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