China will continue to lower its corporate debt levels, even though it has made initial progress, the top economic planner said Monday.
There has been initial progress in reducing leverage levels, with the corporate leverage levels steadying and then declining while debt risks having been mitigated, the National Development and Reform Commission (NDRC) said on its website.
The government will focus on cutting debt levels at state-owned enterprises (SOEs) by improving their governance structure and pushing mixed ownership reform, the commission said.
To lower SOEs' debt levels, the government will work on establishing a debt-ratio warning line management mechanism of different industries, it said.
The country will use market-based and legal means, including debt-for-equity scheme, to address "zombie companies." It will also encourage mergers and acquisitions.
The NDRC did not provide its data on corporate debt levels, but cited figures from the Bank for International Settlements (BIS), which showed China's overall leverage ratio is still growing, but at a slower pace.
Overall leverage was 257.8 percent of GDP at the end of the first quarter of 2017, slightly up from 257 percent at the end of 2016. The non-financial corporate leverage ratio declined to 165.3 percent at the end of March from 166.3 percent at the end of 2016, according to the BIS data.