Select a page

Banking News

China aim to keep debt level in check, keep economic growth

China aim to keep debt level in check, keep economic growth

(12 January 2017 – China) Beijing has promised to seek avenues to mitigate high company debt levels and further cut excess coal and steel capacity, as the country attempts to maintain balanced economic growth while avoiding destabilising asset bubbles.

The Chinese economy grew around 6.7 percent last year, however continues to face increasing uncertainties, the head of the country's state planning agency said.

According to a report from the International Monetary Fund in October 2016, credit growth has been "very fast" by global standards, yet without a clear strategy to tackle excessive debt levels, an increasing risk exists that the country will experience a banking crisis, abrupt slowdown in growth or both.

"Although the domestic economy is stable and improving, it still faces contradictions and problems," said Xu Shaoshi, the top official at the National Development and Reform Commission NDRC).

"We have the confidence, conditions and ability to ensure the economy operates within a reasonable range."

Xu added that China will not allow debt of non-financial firms to rise beyond current levels, and will step up efforts to encourage companies to restructure their debts. China's corporate debt has soared to 169 percent of gross domestic product (GDP).

A growth rate of 6.5 percent will be accepted by China’s leaders, according to reports. They believe that it would give the government the opportunity to concentrate on reducing commercial debt and simultaneously placating housing, commodity and debt markets that was subject to high levels of speculation and volatility throughout 2016.

East & Partners's avatar

Comment on this article


Your comments will not be published. Required fields are marked *


Please enter the word you see in the image below:


Subscribe to our mailing list

Sign up now to keep up-to-date with the latest
market news and insights in B2B banking.

* indicates required

For more information please read our Terms and Conditions and Privacy Statements.