China can handle rising debts, says IMF executive
Level of borrowings way too high, but Zhu Min says Beijing has measures to resolve problem
China has room to deal with rising debt levels, which has become a "serious concern", International Monetary Fund deputy managing director Zhu Min said.
While debt accumulation by companies and local government was "way too high", Beijing had a lot of "policy buffer", including US$3.5 trillion in foreign reserves, to resolve the problems, Zhu, a former deputy governor at the People's Bank of China, said during a panel discussion at an IMF meeting in Washington on Wednesday.
The Chinese government had already taken action to curb borrowing, reducing the chances of an economic "hard landing", he said.
Premier Li Keqiang said last month the government was taking "targeted measures" to address the issue of local debt, and Finance Minister Lou Jiwei has said the authorities will regulate note sales to reduce credit risks.
Fitch Ratings estimates China's total credit, including off-balance-sheet loans, swelled to 198 per cent of gross domestic product last year from 125 per cent four years earlier, exceeding the growth seen before the banking crises in Japan in the 1990s.
Economists expect the Chinese economy, the world's second largest, will probably expand 7.6 per cent this year, the weakest pace of growth since 1999.