Beijing effort and inflation push China debt load down

Nov. 17, 2017

China has reduced debt as a proportion of gross domestic product for the first time in almost six years, in an indication it is tackling what is widely seen as the main economic threat.

 

A recent JPMorgan report said that debt stood at 268 per cent of GDP at the end of the second quarter of this year, ending more than half a decade in which borrowing steadily increased — a legacy of the unprecedented monetary and financial stimulus the country activated to combat the 2008 financial crisis.The proportion for the first quarter had been marginally higher at 269 per cent.Concern about high debt levels led Standard & Poor’s to downgrade China’s sovereign rating last week — the first time it has done so since 1999. The International Monetary Fund warned in August that Beijing’s reluctance to rein in borrowing was “dangerous”