Chinese economists are warning of a financial meltdown after saying total borrowings are now more than double its 2015 gross domestic product.
French news agency AFP is reporting that the country’s debt hit 168.48 trillion yuan (US$25.6 trillion) at the end of last year.
That’s about 249 percent of economic output, AFP reports, citing Li Yang, a senior researcher with government think-tank China Academy of Social Sciences (CASS).
He warned that debt linkages between the state and industry could be “fatal” for the world’s second largest economy.
The national debt has ballooned since Beijing made credit cheap and easy in an effort to stimulate slowing growth, unleashing a massive, debt-fuelled spending binge.
While the stimulus may help the country post better growth numbers in the near term, analysts say the rebound might be short-lived.
But the number, while enormous, is still lower than some non-government estimates.
Consulting firm McKinsey Group said earlier this year that the country’s total debt had quadrupled since 2007 and was likely as high as US$28 trillion by mid-2014.
The debt-to-GDP ratio is not the highest in the world, according to The Guardian. The US has a ratio of 331 percent, much of which is accounted for by federal debt.
CASS in a report last year said China’s debt was 150.03 trillion yuan at the end of 2014, according to previous Chinese media reports.
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