The ramp up in debt is reminiscent of the financial crisis (Royal Bank of Scotland)
Note that Xinhua speaks of stimulus in the future tense, as if the increase in debt wasn’t stimulus that already happened in the first quarter and as if banks were somehow independent of the central government. Because the central and local branches of government own most banks in China, almost any increase in debt is equivalent to official government stimulus, as Mark DeWeaver demonstrated in his book “Animal Spirits With Chinese Characteristics.“
Christopher Balding, professor of economics at Peking University had this to say about the Xinhua editorial: “I think you guys already missed that off-ramp,” he commented on Twitter.
Further evidence he may be right and Xinhua may be wrong: The fiscal deficit. China usually runs deficits of about 1 percent, with notable exceptions during the financial crisis, when it approached 3 percent. This year, the regime is targeting a deficit of 3 percent or more, making it the highest in 34 years.