Former World Bank president and top US diplomat Robert Zoellick is warning Australia’s business leaders not to “bet the house” when it comes to China.
Zoellick said he first sensed complacency about China from Australia’s business leaders when he was here last year to celebrate 10 years of the US-Australia trade agreement, a deal he himself helped broker.
“Some parts of the Australian business community have done very well from China’s growth,” he said said in an interview with The Australian Financial Review in Washington.
Zoellick’s warning comes as fears about China’s looming debt crisis grow bigger by the day.
According to David Lipton, the International Monetary Fund’s deputy managing director, China needs to “immediately tackle rising corporate debt or risk dangerous detours” during its transition to a consumption-oriented economy, said the AFR article.
In an echo of events that triggered the Global Financial Crisis, many economists say China’s debt also includes about $US1.3 trillion in loans extended to borrowers that don’t have sufficient income to cover interest payments.
In fact, according to a recent article in The Australian, China has accumulated debt faster than any G20 nation over the past decade, with its national debt climbing to 247 per cent of GDP.
For Australian manufacturers, this could be a case of being ‘forewarned as well as fore-armed’.