China's debt likely to grow 77% by 2021, but it is slowing

September 28, 2017

HONG KONG - S&P Global Ratings estimates that China's debt could rise a hefty 77% to Chinese renminbi 302 trillion (US$46 trillion) over 2017-2021, but this would means that the pace of growth is slowing.

"Our base-case projection is that China's average credit growth will drop one-third to 12% annually for 2017-2021, said S&P credit analyst, Terry Chan.
“Despite this slowdown, the rate is still above our projection for nominal GDP, implying that the system's high credit risks could still incrementally increase. Therein lies the danger," he added.
The report notes that the Central Government's efforts to curb the surging leverage of State-owned enterprises and local government financing entities should start to bear fruit.
As the economy rebalances more towards consumption away from heavy-industry investment, household debt will likely rise faster than that of the corporate and Government sectors.
"The recent intensification of Government efforts to rein in corporate leverage could stabilise the trend of financial risks over the next few years. But we still foresee that credit growth will remain at levels that will gradually increase financial stress," said credit analyst Christopher Lee. (ATI).