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Dear reader,

Anyone who wants to visit the campus of the controversial offshoot of Fudan University in Budapest in the future may reach it via “Dalai Lama Street”. Or the “Free Hong Kong Street”. But you can also walk along the “Street of the Uyghur Martyrs” in the direction of the university. Because the Hungarian capital and its 9th district have renamed the streets around the as-yet undeveloped area – making it clear to Prime Minister Viktor Orbán’s government what they think of the project. A delicate manoeuvre: Hungary is dependent on Beijing’s goodwill in view of large Chinese loans. And when it comes to the Dalai Lama the leadership is known for its vindictive reactions.

But the People’s Republic also has debt problems of its own. During the Corona epidemic, the Chinese state provided record levels of credit to local governments in order to stimulate the economy. Frank Sieren now takes a look at Beijing’s debt burden and how it compares with that of the US. He concludes that China has a much better handle on its liabilities than the old superpower.

Finn Mayer-Kuckuk introduces Huawei’s new mobile operating system. HarmonyOS is supposed to be the Android killer and free the corporation from some of its US dependence. But has the Chinese tech giant really reprogrammed it from scratch? Experts smell a fraudulent label.

Your
Amelie Richter

Feature

China-USA comparison: not all debts are equal

During the Covid epidemic, the Chinese state has enabled local governments to borrow at record levels. They are supposed to use it to pay for infrastructure projects and thus boost the economy. As a result, China’s economy has grown as desired but so has the debt burden. Depending on how it is calculated, it even exceeds US debt as a share of GDP. But China has some decisive advantages.

By
Frank Sieren

The US and China are both currently trying to boost their respective economic growth with major infrastructure programs and to make their economies more competitive again – even in competition with each other. But as much as the situation of the two heavyweights is similar, the differences are also great. For China, a growth economy, is building up its public debt from a completely different situation than the US.

The stocktake: In the Covid year 2020, the ratio of debt of the American central state to gross domestic product has risen significantly. This year, with the new budget, this important ratio exceeds the psychologically striking 100 percent mark, attracting appropriate media attention. In 2019, it was still at 79 percent. The debt to economic output ratio has thus gone up by more than 20 percentage points.

The comparison with China is not entirely easy, because the systems are different. First of all, there is a direct comparison with the national debt. In China, these have been rising steeply for years from a moderate starting level. Due to Covid, they are currently reaching the 46 percent mark. In Germany, the figure is 70 percent.

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