Chinese Foreign Debt Approached USD$2 Trillion in 2018


China’s foreign debt increased by over 10% YoY in 2018 to approach USD$2 trillion.

Data released by the State Administration of Foreign Exchange (SAFE) on 29 March indicates that as of the end of 2018 China’s foreign debt balance was USD$1.9652 trillion, for an increase of $207.3 billion, or 12%, compared to the end of 2017.

SAFE media spokesperson and chief economist Wang Chunying (王春英) said that the pace of China’s foreign debt growth eased overall last year, with the on-quarter rates of change for the four successive quarters of 2018 coming in at 7.5%, 1.5%, 2.7% and -0.2%.

According to Wang China’s foreign debt risk is “controllable overall,” with the foreign debt balance-to- GDP ratio standing at 14.4% as of the end of 2018, and the ratio of foreign debt to revenues from goods and services exports at 74.1%.

The debt service ratio – defined as the ratio of the sum of long and medium-term external debt principal and interest payments and short-term external debt interest payments to revenues from the export of goods and services, was 5.5%, while the ratio of short-term foreign debt to foreign reserves was 41.4%.

“In future, the foreign exchange authority will further improve a regulatory framework for cross-border capital flows that integrates the two positions of ‘macro-prudence + micro-monitoring,'” said Wang.

“[We] will continue to pay close attention to changes in foreign debt conditions, and strengthen foreign debt risk prevention and maintain the security of the national economy and finance while persevering with management of foreign exchange to service the real economy.”