President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua
President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua
Chen Zhao
Opinion

Opinion

Macroscope by Chen Zhao

Deleveraging is the wrong way to fix China’s economy, when it doesn’t even have a debt problem

  • Chen Zhao says Beijing has embraced the mistaken view that China’s economy is overleveraged. A large part of China’s high debt-to-GDP ratio is actually cheap credit given to the state sector. In fact, the private economy is underleveraged

President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua
President Xi Jinping visits a workshop of China First Heavy Industries in Qiqihar, Heilongjiang province. Is the Chinese economy overleveraged? A large part of China’s high credit-to-GDP ratio is actually “credit” extended to state-owned enterprises. Such “credit” should be reclassified as Beijing’s fiscal outlays. Photo: Xinhua
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Chen Zhao

Chen Zhao

Chen Zhao is founding partner and chief strategist of Alpine Macro. From 2015 to 2016, he was co-director of macro research at Brandywine Global Investment Management. Prior to that, Chen spent 23 years at BCA Research. He holds an MA in economics from the Central University of Finance and Economics, was a visiting scholar at University of Illinois at Urbana-Champaign and pursued post-graduate studies with a PhD candidacy at McGill University.