MNI BRIEF: China’s Higher Leverage Ratio Not Increasing Risks
MNI (BEIJING) - China's rising debt-to-GDP ratio will not increase financial risks, as rising liabilities are accompanied by an increase in asset size, said Li Yang, chairman at the National Institution for Finance & Development, in Beijing on Saturday.
The Chinese government mainly borrowed for investment, which has created a large number of effective assets, Li said in a speech during the Second Annual Conference of Chinese Financial Studies 2024.
The debt-to-GDP ratio rose by 0.8 percentage points to 295.6% by the end of Q2 from the previous quarter, witnessing a total 7.5 pp increase in H1, according to the NIFD's calculations.
Li added that the scale of net wealth controlled by the Chinese government far exceeds that of the U.S., which gives China greater space and resilience to respond to various shocks.