Hong Kong Economic Times (HKET), the leading financial daily in Hong Kong, recently reported that, according to a report that the Institute of International Finance (IIF) released, Chinese debt saw a rapid increase in the third quarter to 335 percent of its GDP. The same ratio was 302 percent at the end of last year. The total debt of the Emerging Countries grew to 250 percent of GDP. The IIF report points out that non-financial sector debts in Lebanon, China, Malaysia and Turkey had the biggest increase. Unlike previous years, non-financial corporate debts have been the main cause of China’s debts this year. By the third quarter, Chinese non-financial corporate debts reached 165 percent of China’s GDP, up from 150 percent for same quarter last year. With the coronavirus, China did not take the route of large-scale government-sponsored stimulus plans. Instead, the Chinese government allowed the companies to enlarge their borrowing scale. It appears China is asking the companies to channel through corporate bonds instead of bank loans. However, recently, many major Chinese companies have defaulted on their bonds.
Source: HKET, November 19, 2020