Study: China Corporate Debt At “Alarming levels”

A new study shows that Chinese companies are operating with "alarming levels" of corporate debt that would be hard to repay if the country’s economic growth slows down. "The high level of corporate debt deserves our attention," vice president of the Chinese Academy of Social Sciences (CASS), a top state think-tank, Li Yang said on Thursday, Xinhua reported.

After a one-year study on China's government debt, corporate debt and individual borrowing, a research team led by Yang will publish their research results next month and will also submit the results to the International Monetary Fund. Yang warned that China's leverage ratio is increasing, and the pace at which the country’s debt is rising will continue unabated if the current global financial crisis persists.

According to the study findings, China's debt-to-GDP ratio stands at 168.9 percent, which is lower than the global average of more than 200 percent. However, the debt-to-asset ratio of Chinese enterprises has reached 105.4 percent, ranking the highest among 20 countries which were studied by the CASS. More...