I'm a Tyler Cowen fan, but this China presentation (see above, and on The Interpreter yesterday), is pretty sloppy.

Let's take debt-to-GDP (about 6 minutes in). The background graph shows China's debt ratio at 230-300% of GDP, which is probably about right for total debt (official plus private, including households). But the graph shows the US at just over 100%, which is about right for official debt, but way too small for total debt. The same graph shows Japanese debt at 60%, which is just outlandishly wrong (government debt alone is around 250% of GDP).

Probably the best data source for comparable global total debt-to-GDP is from the McKinsey Global Institute. The chapter on China's debt puts its debt-to-GDP at 282% in mid-2014, with the US at 269%. The study puts Japan's debt at 400% of GDP. China comes in at number 22 on McKinsey's global ranking of debt by country.

China's economy certainly has many challenges (including debt), and this leaves room for wide differences of outlook. I tend towards the optimistic end of the spectrum, but I readily acknowledge that China could have a cyclical period of below-trend growth (ie. below 7%). Tyler Cowen, however, goes much further. He says 'China is running a very serious risk of a recession which will be deep and also may last really quite some number of years'.

Let's try to put a bit of precision around this prediction by turning it into a falsifiable hypothesis. A recession entails negative growth, and Cowen's prediction is for a 'deep' one. 'Quite some number of years' might mean, say, five, perhaps even more.

Let's then do what The Economist did with Michael Pettis' prediction that China's annual growth would barely break 3% on average this decade. Here's the bet: 'That China has negative growth for five years, starting soon'. I'll put a few dollars on the other side. Or should we follow the Keen-Robertson tradition, with the loser wearing a T-shirt saying 'I was hopelessly wrong on China growth'?