Borrowed wealth has to be repaid someday.

George Soros is worried about the rising debt in China. Who is George Soros? He is the man who made $1 billion in 1992, by shorting the British pound, and apparently earned $4 billion in 2013, partly by shorting the Japanese yen. So worried was China that it warned Soros in January not to go short on the renminbi. China has a debt of $26.6 trillion, which is 2.5 times the size of its entire economy. The US has a similar level of debt and Japan's national debt is 4 times its GDP. But some experts think that the US and Japan were developed economies before accumulating debt, while China is not, and the pace of debt accumulation is worrying. Others say that China's debt burden does not matter because it is mainly domestic, so it can be covered by the government. Soros is convinced that a hard landing for the Chinese economy is inevitable. There is so much debate because no one knows whether the figures published by the government are exact. No one can therefore say for certain whether the growth of the economy will generate enough revenues for the government to keep deficit within control and bring down the non-performing loans of the banks, while spending enough to stimulate growth. Interest rates are low and property prices are too high so the sudden fall in share prices last year means that people have few avenues to invest money. Recent arrests have revealed a huge shadow banking industry which is illegally transferring money to buy assets abroad. The government allows citizens to buy up to $50,000 every year but this is not enough to pay for investments or for paying tuition fees for children studying abroad. This has long been known in India as 'hawala' transactions. However, illegal money transfers are reducing China's foreign currency reserves which it may need to defend its currency if speculators were to mount a serious attack on it. Daily currency trade is over $5 trillion, which amounts to nearly $2 quadrillion every year, whatever that means. China had foreign currency reserves of over $4 trillion, which has dropped to $3.185 at the end of August. Although still the highest in the world it is worried enough to try to keep outflows within limits. A lot of debt is hidden, in that local governments and municipalities are reluctant to reveal their total debt and borrow more to show that they are still growing. In a system governed by fear of punishments no one will want to take responsibility. Maybe that is why Xi Jinping is accumulating absolute power by declaring himself 'core leader', like Mao Zedong so that when the crash comes he can remain unscathed. The trouble with that is that he will never be able to step down. And that is when the fun starts.