China’s credit bubble could be about to burst, after both its property and stock market bubbles have done so over the past year.
Corporate credit has exploded in China, up 21% from 2014 to 2015. The country now has a bunch of debt-laden zombie companies—ones which helped create the property bubble—that now can’t turn a profit.
Credit got a huge boost when refugees from China’s first two bubbles looked to the credit sector as a safe place to park their cash, Business Insider reports.
The oversupply of debt has far outstripped demand for the bonds, creating a bubble that hedge fund manager J. Kyle Bass has said could cause four times the damage of the 2008 housing crisis—which Bass also happened to predict. [BI]
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