China Foreign Debt Rises In Q2 As Banks Increase Borrowing

     BEIJING(MNI) - China's total outstanding foreign debt rose to $1.563

trillion at the end of June, the State Administration of Foreign Exchange (SAFE)

said Friday, up from $1.438 trillion at the end of March.

     "Foreign debt has grown steadily this year. Solid domestic economic growth

has laid the foundation a constant rise of the foreign debt amount," SAFE said

on its website on Friday. "The People's Bank of China and SAFE have worked

together to improve the macro-prudential management of cross-border funding and

enlarge the space for banks and companies to issue foreign debt, helping to

lower the funding costs of the real economy sector."

     Banks' foreign debt holdings contributed the most to the increase, SAFE

numbers showed. Banks' outstanding foreign debt rose to $768.3 billion as of the

the end of June, up substantially from $679.5 billion at the end of March.

     "Banks have made the best use of foreign funding, which has lowered costs

in the second quarter to serve overseas trading and the development of the real

economy," SAFE said.

     Outstanding government foreign debt was $140.2 billion as of the end of

June, up from $122.6 billion in March.

     Outstanding short-term foreign debt increased to $1.01 trillion in June,

compared with $916.4 billion in March. Short-term foreign debt related to trade

accounted for 39% of the total in June, down from 44% in March.

     Outstanding long-term foreign debt edged up to $554.9 billion at the end of

June, up from $521.4 billion at the end of March.

     "We expect the foreign debt to grow steadily in the future," SAFE said.

"And we will continue to observe the changes in foreign debts to make

cross-border funding and investments more convenient and efficiently prevent

foreign debt risks and protect the safety of China's finance system and

economy."

--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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