Panos Mourdoukoutas, a professor at Long Island University and contributor at Forbes, has written a piece on uncertainty in China’s and the US’s economy. He points out that there are currently some rather bleak outlooks on China. He cites author Richard Vague, who warns that expanding private Chinese debt could lead to a ‘crisis’. He made the claim that most major recessions are caused by excess private debt. While this a slightly contentious claim, it does seem to worry many people including Vague, who is a managing partner at Gabriel Investment.
Even if too much private debt does not cause recessions, as economists Scott Sumner firmly asserts, an excess of public uncertainty is also probably not a good signal for the Chinese economy. As has been stated earlier, the Chinese government is not, or at least does not seem to be, concerned about the country’s economic health. However, public fear, founded or not, could have a real negative impact on the Chinese economy.