A more succinct point: the US economy looked really strong in mid-2008. Consumption was very strong, but it turns out that consumption was fueled by unsustainable debt.
China has a serious debt problem in its economy. Not government debt like in the US, but shadow banking debt. My fear, based on reading Pettis primarily, is that the Chinese people will end up paying for that debt. Households that have expensive second homes as investment vehicles will suffer those losses (since there isn't sufficient population to fill those homes), unless those losses are socialized or redistributed.
China has a serious debt problem in its economy. Not government debt like in the US, but shadow banking debt. My fear, based on reading Pettis primarily, is that the Chinese people will end up paying for that debt. Households that have expensive second homes as investment vehicles will suffer those losses (since there isn't sufficient population to fill those homes), unless those losses are socialized or redistributed.