China’s Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans and the End of the Chinese Miracle

Colorful characters and solid writing enliven what could have been an arcane discussion of the precariousness of China’s economic miracle in journalist McMahon’s debut. Though most outsiders believe Chinese economic growth is solidly founded on exports, McMahon reveals the truth: since the 2008 financial crisis, an increase of $12 trillion in bank debt is what has really fueled the Chinese economy. Moreover, many of those loans went to risky enterprises that may never be able to repay their debts, endangering not only China’s but the world’s economy. “For years,” the author writes, “China’s unimpeded ascent... seemed inevitable, but it’s increasingly clear that that version of the future is unlikely.” To back up his thesis, McMahon visits a factory housing the world’s largest—but largely idle—closed-die hydraulic press forge; walks past empty shop fronts in one of China’s “ghost cities”; and dines with a Chinese entrepreneur who’s chosen to build his business in South Carolina because necessities such as power are cheaper there than in China. The book offers no verdict on this situation’s likely resolution, leaving the reader only with the message that fixing it will require a level of “reform, pain and political leadership” of which China’s government may not be capable. Agent: David McCormick, McCormick Literary. (Mar.)