By Michael Pettis Most of last week’s newsletter was dedicated to a discussion on Chinese debt, specifically on how we should think about the Chinese debt structure and on when would we know how much debt is too much debt. Every earlier example of the investment-driven growth model that China follows ran into the problem of an unsustainable increase in debt (once capital began to be misallocated) followed by a credit contraction and an economic crisis. For that reason it is important that investors, analysts and most importantly policymakers understand the way debt risks…
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