China Deleveraging Is Going Into Reverse, New BIS Data Show

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Chinese non-financial corporate debt is rising again as a percentage of gross domestic product following a year and a half of deleveraging from its mid-2016 record, according to new data from the Bank for International Settlements.

The ratio jumped to 164.1 percent in the first quarter of 2018 from 160.3 percent in the final three months of 2017, erasing more than half of the progress Chinese companies had made in reducing debt loads since the ratio topped out at 166.9 percent in the second quarter of 2016, the BIS data, published September 23, show.

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China’s government is looking at ways to counter the effects of an ongoing trade dispute with the U.S., which is set to knock half a percentage point off of Chinese GDP growth, according to Bloomberg Intelligence estimates. That may mean postponing its deleveraging ambitions, which now appear to have derailed even before the two countries began imposing tariffs on each other’s exports earlier this year.

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h/t NineteenEighty9


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