China's stimulus, including interest rate and reserve-ratio cuts to shore up growth, threatens to delay the country's efforts to reduce its debt, posing risks to the financial stability of the world's second-largest economy. Nonperforming loans had already climbed by a record 140 billion yuan ($23 billion) in the first quarter as the expansion in gross domestic product slowed.The strategy of every central bank is to keep credit flowing, it's the only tool in their playbook.
"It's quite an alarming issue," says Bo Zhuang, a China economist at London research firm Trusted Sources. "The government is trying very hard to slow down the pace of the leveraging up, but they are not deleveraging. The debt-to-GDP ratio will continue to go up."
2015-07-15
Debt to GDP Ratio Still Growing in China
Bloomberg: China's Debt-to-GDP Ratio Just Climbed to a Record High
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