The International Institute of Finance estimates that China’s total debt level breached the threshold of 300% of GDP in May 2017, as the country’s household debt-to-GDP’s ratio surges to a record high.
The IIF’s latest Global Debt Monitor report said that China’s household debt-to-GDP hit a record high of 45% in the first quarter of 2014, well above the average of approximately 35% for emerging markets.
Based on its monthly data for total social financing, IIF estimates that China’s total debt exceeded 304% of GDP as of May 2017.
Burgeoning growth in China’s total debt level arrives despite an ongoing deleveraging drive launched by financial regulators towards the end of 2016.
IIF points out that in the first quarter of 2017 emerging markets pushed global debt to the record high level of USD$217 trillion, or 327% of gross domestic product.
“The debt burden is not distributed evenly,” said IIF in its most recent Global Debt Monitor report. “Some countries/sector have seen deleveraging while others have built up very high debt levels.
“For the latter, rising debt may create headwinds for long-term growth and eventually pose risks for financial stability.”