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"[McMahon] comes closer than any previous writer to covering the Chinese economy as Michael Lewis, the hugely popular author of “The Big Short”, might do."


                                           ⏤ The Economist

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In this unprecedented deep dive, McMahon shows how lurking behind China's enviable economic success, is a far more fragile reality. While stories of newly built but empty cities, white-elephant state projects, and a byzantine shadow-banking system have become a fixture in the press, McMahon goes beyond the headlines to explain how such waste has been allowed to flourish and why one of the most powerful governments in the world has been at a loss to stop it. 

Debt, entrenched vested interests, a frenzy of speculation, and an aging population are all pushing China toward an economic reckoning. China’s Great Wall of Debt unravels an incredibly complex and opaque economy, one whose fortunes—for better or worse—will shape the globe like never before.

"Accessible, Malcolm Gladwell-style storytelling... Thanks to the amount of time [McMahon] has spent in the country, he is able to give an authoritative peek behind the curtain opaque financial system."

                                                                                                                        ⏤ The Scotsman

Dinny McMahon spent ten years as a financial journalist in China, including six years in Beijing at The Wall Street Journal, and four years with Dow Jones Newswires in Shanghai, where he also contributed to the Far Eastern Economic Review. In 2015, he left China and The Wall Street Journal to take up a fellowship at the Woodrow Wilson International Center for Scholars, a think tank in Washington DC, where he wrote China's Great Wall of Debt. Dinny is an Australian who currently lives in Chicago, where he works at MacroPolo, a think tank focused on Chinese economic  issues.

Dinny currently writes in depth about how China is attempting to overhaul its financial system and rein in the risks that threaten its stability.


You can get his regular newsletter - The Cleanup - by signing up here:

Recent Writings


1 February 2019, MacroPolo

When Plastic Goes Bad – Credit Card Debt and the Business of Debt Collection

For most of the loans in China’s financial system, when they turn bad there is some sort of security that allows the lender to claw back some, or even most, of what they’re owed. Much of that collateral takes the form of real estate, but collateral can also range from warehouses and factories in the case of corporate loans to diamonds, tea, and bottles of baijiu in the case of wealth management products.

But what if there’s no collateral? What happens when financial institutions broadly, and banks in particular, make unsecured loans?

Not long ago, these questions didn’t really matter. To the extent that banks made loans that weren’t backed by collateral, it was to the most credit-worthy state companies. But in recent years that has changed as retail loans—that is, loans to individuals and households—have become an increasingly important part of banks’ business.

28 November 2018, MacroPolo

The End of the Nonperforming Loan Bubble - More Supply, Less Credit

At the end of 2017, China’s market for nonperforming loans (NPLs) was a bubble. Asset management corporations (AMCs) and investors were willing to pay huge price premiums for banks’ bad loans. The president of China Great Wall Asset Management Co., Zhou Liyao, attributed the bubble to a period of “irrational exuberance.”[1] But a better explanation is that prices were inflated by the influx of new, inexperienced investors backed by cheap credit. However, the bubble is now over, with prices having declined precipitously since the first quarter of 2018 on the back of a sharp increase in the supply of bad loans and a contraction in shadow banking that had previously been an important source of investors’ funding.

1 October 2018, MacroPolo

Getting Credit To Small, Private Companies: A Renaissance for Commercial Paper

Over the last few months, there’s been a surge in bank discounting of commercial paper (otherwise known as bankers’ acceptances and commercial acceptances), a credit instrument predominantly used by small and medium-sized enterprises (SMEs). What makes that so interesting is that the volume of commercial paper being discounted by banks massively contracted following a spate of fraud in 2016.

What followed was a two-year campaign to make commercial paper more transparent, fraud-free, and market-oriented, a campaign that now seems to have restored regulators’ confidence in the market.

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