Ticking Debt Bomb of China

Chinese non-financial debt sector is extremely massive.

Chinese Non-Financial Sector’s Total Debt, 2016 (% of GDP)

The China economy is suffering from the excessive non-financial corporate debt with thousands of "zombie" firms booking losses, kept alive only by continuous bank credit & government subsidies.

According to the Bank for International Settlements, at the end of 2020, the total debt issued to non-financial corporations in China equaled 161% of the country’s GDP.

That was significantly higher than the average for G-20 countries (102%) and even the average for emerging market economies (119%).

Debt owed by China’s non-financial corporates amount to 158% of GDP, dwarfing the average EM corporate debt ratio of 63.5% of GDP.

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