China’s debt-to-GDP ratio falls again, but pace of deleveraging eases as economy falters
- Total debt as a percentage of gross domestic product (GDP) fell to 264.8 per cent in the third quarter, from 265.4 per cent in quarter two
- But this was primarily because GDP output also declined, diluting the effects of China’s deleveraging, says state-backed think tank
Defusing financial risk was one of three economic priorities set by Chinese President Xi Jinping four years ago and the nation’s leverage ratio – which measures the percentage of debt to gross domestic product (GDP) – is closely watched as an indicator of progress.
The lower the ratio, the lower the amount of debt per US dollar of national output.
The ratio fell to 264.8 per cent in the three months to end September, from 265.4 per cent in the previous quarter – the fourth straight quarterly decline, the National Institution for Finance and Development (NIFD) said in a report on Tuesday.
But the decrease of 0.6 percentage points was slower than the 2.6 percentage point fall in the second quarter. That was because GDP output was also falling, which diluted the effects of deleveraging, according to NIFD, a research body under the Chinese Academy of Social Sciences.