Review | Debt ‘at the core of Chinese growth’, argues Australian financial journalist
Dinny McMahon speaks to farmers, factory workers and builders to unpack China’s economic development, and perhaps burst its bubble
by Dinny McMahon
Houghton Mifflin Harcourt
4/5 stars
The appeal of Dinny McMahon’s book is its readability, aided by anecdotes that give insights into China’s economic development and the bubble that has for years defied naysayers. A Mandarin-speaking Australian financial journalist who has worked in the country for more than a decade, he describes how China’s economy has become increasingly dysfunctional.
While exports may once have driven the economy, he writes, that hasn’t been the case since the 2008 global financial crisis, when tens of millions of Chinese lost their jobs. To fund stimulus, China turned to its banks, encouraging them to lend for construction of housing, infrastructure and factories. “Debt has become the motor at the core of Chinese growth”, he stresses, arguing it is the pace at which it has accumulated such liabilities that threatens the stability of the whole system.
McMahon spoke to farmers whose lands were being appropriated by local governments; factory workers at state-owned enterprises and builders constructing ghost cities. In the process, he discovered that rather than top-down decision making from Beijing, reform efforts were partially implemented at best. This is a book of feature writing that illustrates the issues and puts human faces to them.
