How much "runway" does China have left?

As we await China's Q2 GDP report in the face of sharply lower June trade figures, it's useful to ponder once again the China tail-risk question. For years, analysts have been warning about impending doom in China because of the growing mountain of unsustainable debt (see Kyle Bass, Jim Chanos, Andy Xie and George Soros).

In the past, every time China has gotten to the edge of a hard landing, Beijing has confound the bears by kicking the can down the road and forestalling a crisis. That kind of "extend and pretend" strategy is perfectly viable if the road is long enough, but the key question for investors is, "How long is the road?"

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