Chinese think tank raises alarm over ‘poisonous’ debt, with no quick fixes in sight
Amount owed by governments, firms and people is more than double the nation’s GDP
Leverage in China has soared to alarming levels, with overall debt swelling to more than twice the size of the economy at the end of last year, a leading government-backed think tank said.
The amount owed by governments, non-financial businesses and households climbed nearly 11 percentage points over the year to 228 per cent of GDP, or 154 trillion yuan (HK$179 trillion), the National Institution for Finance and Development (NIFD) said in a report on Thursday.
The institution is among the first government-backed bodies to acknowledge the huge debt pile, and many economists say the total is still underestimated.
The debt-to-GDP ratio in the United States was 233 per cent last year. According to 2015 third-quarter data from the Bank for International Settlements, emerging markets as a group had much lower levels of debt, at 175 per cent of GDP.
Economists at a forum hosted by the NIFD said China needed to rein in the “barbarous growth” of the debt and reverse the “poisonous” obsession with borrowing from banks, and also needed to clean up borrowing and lending among enterprises.