The chief economist for the securities arm of the Bank of China says that concerns over China’s debt levels are overblown.
Xu Gao (徐高), chief economist for BOC International (China) (中银国际证券) said that said that the total debt of China’s non-financial sector was equal to 250% of national GDP according to figures from the Bank for International Settlements – slightly lower than the average level for developed economies.
“Under these circumstances, saying that a debt crisis is about to explode is an unfounded concern,” Xu said. “China has been deleveraging starting from 2018.”
Xu made the remarks at the 4th National Development Forum (第四届国家发展论坛) held in Beijing on 15 December by Peking University’s National Development Research Institute.
According to Xu China’s savings rate has remained at around 45% for the past few years, and while there has been a modest dip, it is still twice the rate for other nations and regions.
“These means that China has considerable resources that it can use to support domestic debt.
“Every year China converts over 40% of GDP into savings…if China wants to reduce its debt increases, it need to achieve a consumption transition.”