Around 2008-2009, China's investment pattern changed fundamentally: before that, debt grew rapidly but debt-to-GDP ratio was stable because most debt funded productive investment (building infrastructure worth more than borrowed); after 2008, debt accelerated while GDP decelerated, which should be impossible if debt funds productive investment, proving that China had run out of productive investment opportunities and was investing in non-productive 'bridges to nowhere'.
factualpending
Speaker
Michael PettisEvidence Quote
“before 2007, 2008...Debt grew very rapidly, but the debt-to-GDP ratio just sort of bounced around...That all changed around that time when debt started to accelerate and GDP started to decelerate”
Source
Michael Pettis: China’s Consumption Crisis Is The World’s Crisis— The Monetary Matters NetworkCreated: 8/11/2026, 7:43:21 AM
My Notes
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