China is expected to curb money flows into property and state firms
China definitely requires taking steps to curb the flow of capital into the property market as well as state-owned companies in order to help to slow the soar of debt levels in the economy. That’s what the central bank's chief economist, Ma Jun told the China Business News in his interview.
The previous year, China's overall debt load surged to 250% of GDP. Additionally, the IMF has warned that the high corporate debt ratio of about 145% of GDP could provoke slower economic growth if it’s not addressed properly.
China is unable to cut leverage ratios too hastily because it could hurt economic growth as well as employment, though it should find ways to curb the rise in debt levels in the long run, Ma told in the interview issued on the paper's website on Monday.
Ma considered the property sector along with state-owned enterprises to be major drivers of high debt levels in China’s economy over recent years.