Geopolitics Decanted with Dmitri Alperovitch
Aug 31, 2026 · 48 min · 9 segments
China's boom ran on the largest credit expansion ever recorded — roughly a third of global GDP in eight years. Rhodium Group's Logan Wright, who spent fourteen years tracking the financial plumbing…
Logan WrightGuest
Dmitri AlperovitchHost
I mean, I think that it's underappreciated that a lot of China's growth has depended upon an unprecedented expansion of credit.
And the net result of the end of that credit expansion has been a slowdown in economic growth, particularly in investment.
China has very weak operating cash flows in most of its local government and state-owned enterprises.
So if you slow down credit, you typically slow down investment activity altogether.
And so since the global financial crisis, China saw basically an expansion of around a third of global GDP in new credit in just eight years.
And as credit was gradually cut in half, and now it's about a third of where it was at its peak, credit growth averaged 18% from 2007 to 2016.
So as you start to see credit growth slow, borrowers suddenly cannot refinance, investment activity has to slow.
And because China's economy has not rebalanced toward domestic consumption and away from investment, that's had a huge impact on aggregate growth.
And so officially, China has reported that they've still grown even despite the collapse of the property bubble and despite the end of the impact of the zero COVID restrictions.
They've officially reported, you know, 5.2 percent growth in 2023, 5 percent growth in 2024 and 2025.
What do you think it is? Two, three percent? 1.5 to 2% on average over the last, basically since 2022.
If you told anyone on average, anyone in the Washington community and just any media literate person that the U.S. has outgrown China over the last five years, even on the official data, They probably wouldn't believe that, but it's undoubtedly true even just in renminbi terms.
I mean, I think that it's underappreciated that a lot of China's growth has depended upon an unprecedented expansion of credit.
And the net result of the end of that credit expansion has been a slowdown in economic growth, particularly in investment.
China has very weak operating cash flows in most of its local government and state-owned enterprises.
So if you slow down credit, you typically slow down investment activity altogether.
And so since the global financial crisis, China saw basically an expansion of around a third of global GDP in new credit in just eight years.
And as credit was gradually cut in half, and now it's about a third of where it was at its peak, credit growth averaged 18% from 2007 to 2016.
So as you start to see credit growth slow, borrowers suddenly cannot refinance, investment activity has to slow.
And because China's economy has not rebalanced toward domestic consumption and away from investment, that's had a huge impact on aggregate growth.
And so officially, China has reported that they've still grown even despite the collapse of the property bubble and despite the end of the impact of the zero COVID restrictions.
They've officially reported, you know, 5.2 percent growth in 2023, 5 percent growth in 2024 and 2025.
What do you think it is? Two, three percent? 1.5 to 2% on average over the last, basically since 2022.
If you told anyone on average, anyone in the Washington community and just any media literate person that the U.S. has outgrown China over the last five years, even on the official data, They probably wouldn't believe that, but it's undoubtedly true even just in renminbi terms.
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