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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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4.12  ·  Rating details ·  812 ratings  ·  90 reviews
A stunning inside look at how and why the foundations upon which China has built the world's second largest economy, have started to crumble.

Over the course of a decade spent reporting on the ground in China as a financial journalist, Dinny McMahon gradually came to the conclusion that the widely held belief in China's inevitable economic ascent is dangerously wrong.

In thi
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ebook, 288 pages
Published March 13th 2018 by Houghton Mifflin
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Average rating 4.12  · 
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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
L.A. Starks
Feb 12, 2020 rated it it was amazing
Although published in 2018, the author is prophetic about the coronavirus when he closes with the possibility of political problems if China's fast pace of growth slows.

This is more closely-observed and reported observations than economic text by a man who knows China well. For that reason, it is highly accessible to the lay reader.

As the world is experiencing so much right now on the issue of the coronavirus epidemic in Hubei province, it can be difficult to get accurate information about inter
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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 ug
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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 Ch ...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, Chi ...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 w ...more
Jeanette
Mar 03, 2020 rated it really liked it  ·  review of another edition
It's a very good book on the topic. There are numerous China economics or "plans" out there which are nationally proclaimed or advertised within China. Or written about too. And also many more by non-Chinese from the outside looking in to Chinese fast paced progress. This is nearly the opposite of that method. It's "from the inside".

As glad as I am that I read it, I don't think it is easy to understand. Not so much the economics of specifics in various categories of goods, resources, uses, plan
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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
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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
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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 econo ...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
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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.
Fredrik Tånnander
Oct 25, 2020 rated it really liked it
Shelves: kindle
Growth sustained by debt, an outlook on the Chinese Economy.

China has a debt problem. According to Trading Economies, a consultancy, China’s debt-to-GDP ratio has increased by 121 percent since 2000, while the same ratio for OECD countries is less than 54 percent . China’s economic growth, closely correlated to deficits, have slowed from 14 to 6 percent between 1993 and 2019 . Growth seems to dependent on further debt expansion. Why is China’s growth dependent on debt? This essay will answer ho
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Alex Givant
Nov 05, 2019 rated it it was amazing  ·  review of another edition
Shelves: audio, economy, china
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 gav ...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.
Max
Jun 03, 2020 rated it it was amazing
Fascinating window into the inner workings of the Chinese financial system and how it is so deeply intertwined with the policies of the Chinese Communist Party.
João
Jun 25, 2020 rated it really liked it
Page 23 - "Every American boy and girl is brought up to play by the rules as a way to ensure that everyone is treated fairly". Why always the absolute statements?
I started by giving one-star to this book. Then, it got much better.
I must remember not to be a 屌丝 (diao si) which apparently means male pubic hair.
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 aca
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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 det
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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. Pe
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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 Secu ...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.
Jeffrey
Apr 09, 2020 rated it liked it
Shelves: finance, china, economics
China’s Great Wall of Debt is an in depth look at the problems identifying the problem that China faces as it attempts to continue its growth in the coming years. McMahon has a decent familiarity with the subject matter, there are good amounts of references to first hand sources, research that he has done himself, as well as government resources.

However, despite identifying the problems correctly, McMahon’s analysis is often simplistic. In short, McMahon claims that Chinese government policies (
...more
Evan
Mar 05, 2020 rated it really liked it  ·  review of another edition
Shelves: china
A very thoughtful book. I felt it was one of the easiest to read and most well written books I've read in a while. In the commentary I've read or heard about China, there is always a statement along the lines, "I'm criticizing the Chinese Communist Party (CCP), not the Chinese people." I thought Dinny did a great job of illustrating this with the numerous stories of Chinese people and their struggles. Additionally, he kinda of makes the argument that the CCP doesn't have that much control over t ...more
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 a
...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 people
...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 th
...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 s
...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 D ...more

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