PBOC says leverage ratio might soar in the near-term

In China, the leverage ratio is likely to edge up moderately in the near term notwithstanding the authorities’ push to deleverage as well as the current priority is to slow the tempo of growth in that ratio, as deputy governor of the People's Bank of China, Yi Gang, informed on Friday.

In an interview with state TV ahead of the two-day G20 Hangzhou Summit scheduled on September 4, Yi told that China's overall leverage ratio appears to be relatively high, especially for the corporate sector, as well as the major government has made the right call to deleverage.

However, in the short term, China’s authorities require stabilizing the leverage ratio first, he added. In  this particular case, stable stands for stopping the leverage ratio from soaring further. However, the country’s government seems to be unable to achieve it in nearer term.

Most probably, the overall leverage ratio will keep going up a bit in the nearer future. Respectively, the government is expected to slow the pace of the surge in the leverage ratio first. 

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