Nation's total debt level still moderate by world standards: IMF official

Updated 2017-10-30 09:31:57 Global Times

China's household and public-sector debt levels remain moderate, with corporate debt at a relatively high point. But the central government is tackling the issue by addressing leverage, an IMF official said in Beijing on Saturday.

Though China's household mortgage-related debt has gone up quite a bit, household debt in general is not yet particularly high by international standards, Alfred Schipke, IMF senior resident representative for China, told the Global Times on the sidelines the Seminar on International Economic Governance Reform, organized by the International Economics and Finance Institute of the Ministry of Finance.

As for the public sector, even using a broader definition to include debt of local governments' financing vehicles and government debt funds, the debt is not bloated by international standards, Schipke said, noting that authorities need to make sure the current level of debt does not snowball too rapidly.

The type of debt the IMF has particularly highlighted is corporate debt. In an international context, corporate debt as a proportion of GDP between 108 percent and 150 percent is considered high.

"Now, the focus of the Chinese authorities is to address leverage. It's the right focus, because a large chunk of corporate debt is related to State-owned enterprises (SOEs) and zombie firms. By carrying out SOE reform and letting zombie firms exit, the government is addressing the debt issue," Schipke said.

Schipke also applauded China's efforts in opening up its financial markets. "We think more competition is positive. Allowing [foreign] firms to come into China to compete is a good thing. The focus is always strong regulation," he said.

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