Behind its lectures, China is a sinner, too –

The main point is that China’s debt burden is far higher than it likes to admit, and much of that debt has piled up in the past few years, as a result of Beijing’s response to the global financial crisis.

“Even though headline sovereign debt levels are low in China, so much quasi-sovereign activity happens through the banking system that if you include some of those contingent liabilities, the number can get very big,” says Charlene Chu, head of Fitch’s China Bank Ratings.

“People forget that China undertook its fiscal stimulus package through the banking system rather than by issuing public debt in the way that other countries did.”

via Behind its lectures, China is a sinner, too –

4 Replies to “Behind its lectures, China is a sinner, too –”

  1. Internal debt is a rising issue for China – Moody’s estimates that a large chunk of the debt issued to provincial authorities is worse than junk, and the Chinese government has issued instructions for this debt to be re-written as corporate rather than state debt to minimise the impact on the banking system.

    The difference of course though is that China’s economy is still growing enabling a certain amount of funds to be plowed into contingency planning, something that Western governments are struggling for.

  2. The best question that one can ask is: Who is all this debt owed too? Why does the media only tell us that everyone is in debt and never dare to look at the other side of the coin?

Comments are closed.