According to the International Monetary Fund (IMF), China needs to control its corporate debt before the situation becomes unmanageable. Does bitcoin hold the answer?
A report from the IMF has found that at $25 trillion, China’s debt accounts for 254 percent of GDP. As a consequence, startups and businesses could soon turn their attention to the growing popularity of bitcoin.
Of course, China isn’t the only country that is experiencing a high percentage of GDP. CNN reports that the U.S. also has a similar percentage, but what sets China apart is the rate at which it has been growing. A report from McKinsey has found that it quadrupled between 2007 and 2014.
Devaluation of the Chinese Yuan
The Chinese Yuan is currently experiencing depreciation. This is down to the government’s attempt to build economic wealth into the country by pumping additional funds into the economy. However, despite this, it hasn’t done much to halt the warning from the IMF.
Ever since China’s financial trouble began the country’s economy has stalled with low export rates adding to China’s problems. Of course, if China isn’t able to turn their debt around businesses will continue to struggle.
Does Bitcoin Have the Answer?
Of course, one way that can help the country out is through the use of bitcoin. Rising in popularity, the digital currency isn’t controlled by banks or the government, which could answer the country’s problems.
Last month, CCN reported that the fear of inflation was a driving force for many toward bitcoin regardless of the fact that the Chinese government is cautious about the digital currency.
Not only that but as bitcoin doesn’t have any links to the IMF, this presents a perfect opportunity for the country in the long term.
Only time will tell.
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