The Strategist

CNBC: China is facing new economic threat


06/30/2021 - 04:04



China's debt has risen sharply over the past decade and has become one of the biggest challenges for the Chinese government, CNBC reported.



picryl
picryl
Beijing sees the country's rising level of liabilities as a potential threat to economic stability. In recent years, the authorities have tried to reduce dependence on them, but the coronavirus pandemic and the resulting crisis have halted efforts in this direction.

The spread of the virus has hit Chinese businesses. Authorities have been forced to make it easier for companies to obtain loans, the publication notes.

As a result, in the third quarter of 2020, the level of government debt broke a historical record: it was almost 290% of China's GDP, according to the Bank for International Settlements.

Other major economies, such as the US, Japan, European countries are in a similar situation. Here too, the authorities had to help businesses and citizens cope with difficulties.

However, CNBC writes, the structure of Chinese debt is different: more than 160% of the country's GDP comes from the corporate sector, not the government sector, as in the US and Japan.

Against the backdrop of economic recovery after COVID-19, China has returned to its efforts to limit its debts. According to experts at UK bank Barclays, China's credit growth will slow to 10-10.5 per cent by the end of 2021, down from 13.3 per cent at the end of last year 2020.

source: cnbc.com