World

China’s Finance Minister brushes off debt concerns

BEIJING: China's Finance Minister yesterday brushed aside persistent concerns that the country's ballooning debt could spark a financial crisis, stressing that debt levels are well within control.

"We are capable of ensuring there is no systemic risk," Mr Xiao Jie said on the sidelines of China's annual parliamentary session.

While he acknowledged the need for greater oversight and management of debt issuance by local governments, he said total government debt was well within safe limits.

China's total government debt as a percentage of gross domestic product fell last year, Mr Xiao said, from 36.7 per cent of GDP in 2016 to 36.2 per cent last year.

His remarks echoed those of other Chinese policymakers, who in recent months have trumpeted tackling financial risk while allowing debt to continue to grow, albeit at a slower pace.

"We've taken note of some international institutions making predictions left and right on this topic," he said, before noting there were strict limits for government debt levels.

Those foreign institutions include the International Monetary Fund, which has repeatedly warned of risks stemming from China's ballooning debt and the need for deleveraging.

Since the global financial crisis in 2008, China's overall debt as a percentage of GDP has grown more than 10 per cent a year on average, according to IMF estimates, which assessed that the ratio had rocketed to 234 per cent of GDP by 2016. Much of the debt is held by companies, some of which are state-owned. - AFP

WORLD