China debt load hits its record high
In the first quarter, China’s total debt surged to a record 237% of GDP. The given outcome appears to be far above the country’s emerging-market rivals, thus increasing the overall risk of a financial downtime or a prolonged slowdown in growth.
Beijing has gotten down to massive lending in an attempt to stimulate economic growth, thus bringing overall net debt to about Rmb163 trillion close to the end of March. That’s true for both foreign and domestic borrowing.
Obviously, such levels of national debt in reality appear to be much higher than in other developing economies. On the other hand, they’re quite comparable to the levels in the Eurozone and America.
While the absolute amount of China’s debt load is still a serious concern, financial analysts and traders are paying more attention to the speed of its accumulation. For instance, China’s debt was just 148% of GDP close to the end of 2007.
In fact, every major country with rapidly growing debt has faced either a prolonged slowdown of its GDP or a financial crisis, so China isn’t an exception.