China’s debt ratio growing amid economic slowdown

Bloomberg

China’s efforts to shore up sagging economic growth are leading to a resurgence in indebtedness, underlining the challenge President Xi Jinping’s government faces in curbing financial risk.
The nation’s total stock of corporate, household and government debt now exceeds 303% of gross domestic product and makes up about 15% of all global debt, according to a report published by the Institute of International Finance (IIF). That’s up from just under 297% in the first quarter of 2018. The real growth of the world’s second-largest economy slowed to a record-low pace in the second quarter amid the negative effects of the trade war with the US as well as longer-term factors such as its aging society. In a bid to manage the slowdown, the government has tried to funnel credit to the private sector and encourage domestic consumption — at the price of higher debt.
That’s a turnaround from 2018’s sweeping campaign to curb off-balance sheet corporate borrowing from the so-called shadow banking sector, a signature campaign by Xi. While that effort did have some success, borrowing in other sectors offset it, according to the IIF. The marked slowdown in the economy also affects the burden that debt places on the economy.