China's Great Wall of Debt

Clay Smith

All, Construction, 2019, Services & Support, China, Debt, Great Wall of Debt 0 Comment

The Wall Street Journal had a fascinating article a few days
ago about the increase in construction projects that are struggling to pay back
investors on any of their ambitious projects across rural China. The article, “There’s
No Money Right Now”
, shows a stark picture of an unfinished outdoor
stadium in Sandu. The county of 400,000 people has a goal by 2020 to eliminate
poverty, which is defined by the government as living on less than 95 cents a
day. The ability to pay interest, let alone any return of principal is very
unlikely. The root of the problem in China is easy off-balance-sheet borrowing
by local governments offered to individual investors by independent brokers and
wealth advisors.

There are many parallels to the unprecedented borrowing in
the US in late 2008/2009. If you read through the comments in the referenced WSJ
article, you will find someone comparing the  
empty arenas to Las Vegas and California in 2009. Does your company have
any projects in China? Are you seeing any financing or payment troubles related
to your projects at home or abroad?

We have blogged recently about the economic forecasts for
Georgia and the overall U.S. economy, and most of the reports we have focused
on see steady interest rates and continued robust construction permits and
financing throughout 2019. Applied Software has multiple Autodesk
and SaaS
solutions to help your firm become more productive and meet your tight time
frames. Let us know how we can help with any of these solutions or consulting options
that can empower you and your team to build a great 2019.