China Should Keep Debt Levels Sustainable: Advisor

China should maintain rapid economic growth to absorb its growing debt, and avoid a quick rise in domestic interest rates to keep the current high level of debt sustainable and avoid systemic financial risks, wrote Zhang Ming, senior fellow of the Institute of Finance and Banking at the Chinese Academy of Social Sciences in a blog post. China’s macro leverage ratio, meaning overall debt-to-GDP ratio could be as high as 303.8% by end-2021 if local government implicit debts and debts raised by their financing vehicles are included, said Zhang. At present, local governments bear the highest default risk and their debt-to-GDP ratio is as high as 106.6%, said Zhang.