For Xiao Jie, the risk of China's growing debt is "controllable"
China’s Finance Minister tries to reassure the world that the country can still lend to boost its economy. At the end of 2016, Chinese central and local government debt totalled 27.3 trillion yuan, or 36.7 per cent of GDP. However, Chinese corporate debt was about 150 per cent.
Beijing (AsiaNews/Agencies) – China has “relatively large room” for more government debt, Finance Minister Xiao Jie said at his first press conference on the side-lines of the National People’s Congress currently underway in Beijing. This means it can expand debt ratio to bolster growth.
Xiao plans to open a "front door" for local governments to borrow, whilst closing the "back doors" by banning illegal local government borrowing.
Over the years, local governments have accumulated large debts to build what often proved to be useless and uncompetitive residential and infrastructural projects and services that risk failure.
The government came to the rescue by swapping over 8 trillion yuan (US$ 1.1 trillion) of local government debt with low-interest, long-term bonds.
Xiao said Chinese central and local government debt totalled 27.3 trillion yuan (US$ 3.7 trillion) by the end of 2016, or 36.7 per cent of Gross Domestic Product (GDP).
“China’s government debt risk is controllable,” Xiao said. “Compared to international peers, the Chinese government still has a relatively large room to borrow.”
Although China’s government debt is low, the country’s corporate sector is accumulating debt at an alarming rate.
The International Monetary Fund said last June that China’s corporate debt level, which was about 150 per cent of GDP then, was “a serious, and growing, problem”.
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09/10/2007
