China’s Debt-to-GDP Ratio Just Climbed to a Record High

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China’s debt is still growing faster than its economy

While China’s economic expansion beat analysts’ forecasts in the second quarter, the country’s debt levels increased at an even faster pace.

Outstanding loans for companies and households stood at a record 207 percent of gross domestic product at the end of June, up from 125 percent in 2008, data compiled by Bloomberg show.

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.

“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.”

Full article: China’s Debt-to-GDP Ratio Just Climbed to a Record High (BloombergBusiness)

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