Across The Border | No Chinese financial crisis over next three years, says S&P Ratings
Total national debt has quadrupled since 2007, to a record 250 per cent of gross domestic product by the end of last year
A growing number of commentators now fear China’s growing debt mountain has become a ticking time bomb.
But they might be worrying overly, according to S&P Global Ratings, which thinks a financial crisis is unlikely in the country within the next three years.
China’s total debt has quadrupled since 2007 to a record 250 per cent of gross domestic product by the end of last year, sparking fears among China watchers the buildup might trigger an “economic avalanche” which could effectively drag the world economy down with it.
Christopher Lee, a credit analyst at S&P Global Ratings, however says he has been getting different messages from some of the firm’s Asian investors.
“The majority of those we polled believe China is unlikely to face financial crisis over the next three years. They say there is still enough room to manoeuvre on policy, as the government tries to buy time between balancing the opposing priorities of growth against rising financial risks,” he said.
The ratings agency defines a “financial crisis” as non-performing loans (NPL) exceeding 15 per cent of total bank lending.
