China’s Total Domestic Debt Hit 317% of GDP by April for Record Quarterly Increase: IFF

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A new report from the International Institute of Finance (IIF) sheds light on the current state of China’s overall debt levels.

The report published by the Washington-headquartered IFF in May indicates that China’s total domestic debt reached 317% of GDP in the first quarter of 2020.

The 17 point increase compared to 300% in the final quarter of 2019 marks the largest quarterly rise on record, during the period of China’s peak struggle to contain the spread of COVID-19.

Figures from Chinese think tank the National Institution for Finance and Development (NIFD) point to total debt of 245.4% of GDP as of the end of 2019, for a rise of 6.1 percentage points compared to the preceding year.

IIF figures also show that household debt rose to 54.3% of Chinese GDP in the final quarter of last year, as compared to 51.4% during the same period of 2018.

China’s domestic debt has been rising at rate of around 20% per year on average since the Great Financial Crisis of 2008, significantly outpacing GDP growth.

IFF data indicates that China’s outstanding debt claims on the rest of the world breached $5.5 trillion in 2019 – or over 6% of global GDP, as compared to $875 billion in 2004.

The IFF said that the surge in China’s lending abroad was driven by the Belt and Road initiative, which has channelled $730 billion in lending to more than 112 countries since 2013.

Figures from China’s State Administration of Foreign Exchange (SAFE) put the China’s foreign debt at USD$2.05 trillion at the end of 2019, as compared to $2.03 trillion the preceding quarter.

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