{"id":1824,"date":"2016-06-18T10:23:00","date_gmt":"2016-06-18T10:23:00","guid":{"rendered":"https:\/\/sunkrish.com\/?p=1824"},"modified":"2017-01-16T02:56:15","modified_gmt":"2017-01-16T02:56:15","slug":"chinas-debt-more-than-double-its-gdp","status":"publish","type":"post","link":"https:\/\/sunkrish.com\/index.php\/2016\/06\/18\/chinas-debt-more-than-double-its-gdp\/","title":{"rendered":"China&#8217;s debt more than double its GDP"},"content":{"rendered":"<figure id=\"attachment_3443\" class=\"thumbnail wp-caption alignleft\" style=\"width: 239px\"><a href=\"https:\/\/sunkrish.com\/index.php\/2016\/06\/18\/chinas-debt-more-than-double-its-gdp\/chinas-debt\/\" rel=\"attachment wp-att-720\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-3443 size-full\" src=\"https:\/\/sunkrish.com\/wp-content\/uploads\/Chinas-Debt.jpg\" width=\"239\" height=\"134\" srcset=\"https:\/\/sunkrish.com\/wp-content\/uploads\/Chinas-Debt.jpg 239w, https:\/\/sunkrish.com\/wp-content\/uploads\/Chinas-Debt-150x84.jpg 150w\" sizes=\"auto, (max-width: 239px) 100vw, 239px\" \/><\/a><figcaption class=\"caption wp-caption-text\">China&#8217;s Debt more than GDP<\/figcaption><\/figure>\n<p>China\u2019s total borrowings were more than double its gross domestic product (GDP) last year, a government economist said, warning that debt linkages between the state and industry could be \u201cfatal\u201d for the world\u2019s second largest economy.<\/p>\n<p>The country\u2019s debt has ballooned as Beijing has made getting credit cheap and easy in an effort to stimulate slowing growth, unleashing a massive debt-fuelled spending binge.<\/p>\n<p>&nbsp;<\/p>\n<p>While the stimulus may help the country post better growth numbers in the near term, analysts say the rebound might be short-lived.<\/p>\n<p>China\u2019s borrowings hit 168.48 trillion yuan ($25.6 trillion) at the end of last year, equivalent to 249 per cent of the economy\u2019s GDP, Li Yang, a senior researcher with a top government think tank, the China Academy of Social Sciences (CASS), told reporters yesterday.<\/p>\n<p>The number, while enormous, is still lower than some outside estimates.<\/p>\n<p>Consulting firm the McKinsey Group has said that the country\u2019s total debt was likely as high as $28 trillion by mid-2014.<\/p>\n<p>CASS, in a report last year, said China\u2019s debt amounted to 150.03 trillion yuan at the end of 2014, according to previous Chinese media reports.<\/p>\n<p>The most worrying risks lie in the non-financial corporate sector, where the debt-to-GDP ratio was estimated at 156 per cent, including liabilities of local government financing vehicles, Li said.<\/p>\n<p>Many of the companies in question are state-owned firms that borrowed heavily from government-backed banks and so problems with the sector could ultimately trigger \u201csystemic risks\u201d in the economy, he said.<\/p>\n<table width=\"100%\">\n<tbody>\n<tr>\n<td><strong>DRAGON IN TROUBLE<\/strong><\/td>\n<\/tr>\n<tr>\n<td>\n<ul>\n<li>China\u2019s borrowings hit \u00a5168 trn ($25.6 trn) at the end of last year, equivalent to 249% of the economy\u2019s GDP<\/li>\n<li>McKinsey Group said country\u2019s total debt as high as $28 trn by mid-2014<\/li>\n<li>Most worrying risks lie in the non-financial corporate sector, where the debt-to-GDP ratio was estimated at 156%<\/li>\n<li>Problem will also affect state coffers because Chinese banks are \u201cclosely linked to the government\u201d<\/li>\n<li>The People\u2019s Bank of China has announced that new loans extended by banks jumped to \u00a5985.5 bn last month, up from \u00a5555.6 bn in April<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>\u201cThe gravity of China\u2019s non-financial corporate (debt) is that if problems occur with it, China\u2019s financial system will have problems immediately,\u201d Li said. He added that the problem will also affect state coffers because Chinese banks are \u201cclosely linked to the government\u201d.<\/p>\n<p>\u201cIt\u2019s a fatal issue in China. Because of such a link, it is probably more urgent for China than other countries to resolve the debt problem,\u201d he said.<\/p>\n<p>Speaking earlier this week, David Lipton, first deputy managing director with the International Monetary Fund, also singled out China\u2019s corporate borrowing as a major concern, warning that addressing the issue is \u201cimperative to avoid serious problems down the road\u201d.<\/p>\n<p>Despite the concerns, China is having difficulty kicking its credit addiction. On Wednesday, the People\u2019s Bank of China announced that new loans extended by banks jumped to 985.5 billion yuan last month, up from 555.6 billion yuan in April.<\/p>\n<p>&nbsp;<\/p>\n<p>Source: <a href=\"http:\/\/www.business-standard.com\/article\/international\/china-s-debt-more-than-double-its-gdp-116061600556_1.html\" target=\"_blank\">http:\/\/www.business-standard.com\/article\/international\/china-s-debt-more-than-double-its-gdp-116061600556_1.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>China\u2019s total borrowings were more than double its gross domestic product (GDP) last year, a government economist said, warning that debt linkages between the state and industry could be \u201cfatal\u201d for the world\u2019s second largest economy. The country\u2019s debt has &hellip; <a href=\"https:\/\/sunkrish.com\/index.php\/2016\/06\/18\/chinas-debt-more-than-double-its-gdp\/\">Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":3443,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15,4,497,5],"tags":[332,316,703,705,314,302,396,363,704],"class_list":["post-1824","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporate-business-advisory-services","category-financial-corporate-services","category-cross-border-transactions-mas-joint-ventures","category-india-international-corporate-updates","tag-capital","tag-china","tag-china-academy-of-social-sciences-cass","tag-david-lipton","tag-debt","tag-international","tag-international-monetary-fund-imf","tag-mckinsey","tag-peoples-bank-of-china"],"_links":{"self":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/1824","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/comments?post=1824"}],"version-history":[{"count":5,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/1824\/revisions"}],"predecessor-version":[{"id":3444,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/posts\/1824\/revisions\/3444"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media\/3443"}],"wp:attachment":[{"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/media?parent=1824"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/categories?post=1824"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sunkrish.com\/index.php\/wp-json\/wp\/v2\/tags?post=1824"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}