China’s debt risk under control – Official

Amid international concerns that China’s debt could drag on its economy, “China’s combined central and local government debt reached 27.33 trillion Yuan (3.96 trillion dollars) by the end of 2016.

“The debt-to-GDP ratio was 36.7 per cent,’’ Chinese Finance Minister Xiao Jie said during a news conference on the sidelines of the annual plenary session of the National People’s Congress.

According to Xiao, the debt-to-GDP ratio is expected to remain around the same level until the end of the year.

“Compared to international levels, China’s relatively low ratio allows room for the government to further raise debt,’’ he said.

“The Chinese government’s debt risk is generally under control.

“However, I don’t want to avoid saying that there are law and rule violations in issuing loans and guarantees.

“The debt-paying ability in several regions is weakening,’’ Xiao said.

According to estimates, China’s combined government, corporate and household debt amounted to almost 260 per cent of GDP at the end of 2016, up from 160 per cent in 2008.

The International Monetary Fund (IMF) and credit ratings agencies have expressed concerns that China’s surging debt could trigger a banking crisis or further slow the country’s economy.

The IMF in 2016 recommended several measures for dealing with the growing debt, including tightening budget constraints on state-owned businesses and restructuring or liquidating indebted firms.
(dpa