China bears have had their fears reconfirmed over the nation’s mountainous debt by none other than the nation’s central bank governor. Is the world’s second-biggest economy heading for a crash?
On Friday, People’s Bank of China Governor Zhou Xiaochuan confessed to reporters that “non-financial corporate leverage is too high. First of all, (the debt levels of) every business, especially those with leverage that already is too high, have to be controlled.”
The communist-ruled giant’s credit binge has taken total debt from around 150 percent of gross domestic product before the 2008 global financial crisis, to more than 260 percent currently.
Zhou’s deputy, Yi Gang, said the growth in leverage “isn’t conducive to the sustainable development of the economy and accumulates certain risks.”
Beijing plans to help restructure firms with excessive debt burdens, while also continuing to purge excessive industrial capacity. Zhou suggested support would be withdrawn for the…
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