Date
17 August 2019
China’s total corporate, household and government debt is estimated to be at more than US$40 trillion. Photo: Reuters
China’s total corporate, household and government debt is estimated to be at more than US$40 trillion. Photo: Reuters

China’s debt tops 300% of GDP, now 15% of global total: IIF

A key gauge of China’s debt has topped 300 percent of gross domestic product, according to the Institute of International Finance (IIF), a Washington-based private global financial industry association.

China’s total corporate, household and government debt rose to 303 percent of GDP in the first quarter of 2019, from 297 percent in the same period a year earlier, Reuters quoted the IIF as saying in a report released this week.

“While authorities’ efforts to curb shadow bank lending (particularly to smaller companies) have prompted a cutback in non-financial corporate debt, net borrowing in other sectors has brought China’s total debt to over $40 trillion – some 15% of all global debt,” the IIF said.

“Of note, onshore bond issuance suggests a big pickup in borrowing by local governments and banks this year.”

China’s economic growth slowed to 6.2 percent in the second quarter, its weakest pace in at least 27 years, as demand at home and abroad faltered in the face of mounting US trade pressure.

To revive investment and protect jobs, Beijing has been encouraging banks to lend more, particularly to struggling smaller firms. It has also unveiled billions of dollars in tax cuts and infrastructure spending, Reuters noted.

In the first half of this year, local governments’ total net bond issuance reached 2.1765 trillion yuan (US$316.5 billion), China’s finance ministry said earlier this week.

Chinese officials have said repeatedly said debt risks are manageable overall.

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RC

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