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...

Social Unrest Explodes in China

Shirong Chen
BBC News China analyst

Social unrest is on the rise in China, according to an analysis by a Chinese think-tank.

The country is grappling with more acute social problems than ever before, according to a report from the Chinese Academy of Social Sciences. Crime is also up, despite a nationwide campaign to shore up social stability. Although continued economic growth has provided a greater number of jobs, China has seen more social conflict in 2009 than before.

The report on China's social trends sounds a stark warning to policy makers. The authors believe deep resentment has been accumulating over the past few decades against unfairness and power abuses by government officials at various levels. They quote six large-scale popular protests - from taxi strikes to unrest in central China in June - involving tens of thousands of people.

This does not include the rioting in the north-western region of Xinjiang, where nearly 200 people were killed in early July.

Urban-rural gap

There has been more crime too - official figures for January to October 2009 show more than four million recorded criminal cases, an increase of about 15% above last year. The report admits some of China's policies have prevented more people from sharing the benefits of the economic development.

The urban-rural income gap, for example, has become even bigger and the country's phenomenal GDP growth has been achieved at the expense of the rural population, the environment and overall social cohesion.

The report is a damning indictment on the authorities' slogan of building a harmonious society. But there is one ray of hope in the report - while the Chinese authorities are taking tighter control over the media, people are turning more and more to the internet to expose official failings and abuses. In the past 12 months, nearly a third of the top stories originated from the internet, pushing the boundaries of press freedom.