China’s second-quarter GDP soared at 6.7% slightly higher than the 6.6% growth rate analysts expected.

On the other hand, warnings over debt-fueled growth have become increasingly regular, which promptly caused S&P and Moody’s reaction, cutting the country’s sovereign credit outlook to negative in March:
  • China’s Credit Rating by Moody’s: Aa3; negative outlook; revised on Mar 02 2016;
  • China’s Credit Rating by S&P: AA-; negative outlook; revised on Mar 31 2016.
Bloomberg News [1] reported that current Chinese debt levels:

highlights concern among global investors that the ruling Communist Party will struggle to overhaul Asia’s
largest economy at a time when capital is flowing out of the country and debt levels have climbed to an
unprecedented 247 percent of gross domestic product - [regard chart 1 and infographic 1]

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George Soros has already warned about China’s risks to the overall economic stability, meanwhile Chinese supporters argue that the country is different due to its sheer size and the ability of a one-party government to exert an unprecedented control over the economy.

There are evidences of stresses, even if authorities continue to risk off any crack possibilities. China’s financial markets keep bouncing amid concerns that authorities won’t add more stimulus. The economic outlook keeps deteriorating as shown by the Shanghai Composite Index, which has been tumbling since August 2015 (chart 2).

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