https://orcid.org/0000-0003-0581-4049
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ABSTRACT
China’s debt issue has attracted extensive attention from investors and China watchers around the world. Previous studies generally concluded that China’s credit crisis is looming. Responding to these concerns, the Chinese authorities started to systematically deal with its debt issue from 2016. This study examines the factors that have contributed to the accumulations of debts, and reviews the deleveraging strategies adopted in different sectors such as non-financial corporate, financial corporate, household and public sectors. This study concludes that some positive progress has been achieved, and at the same time challenges remain.
Acknowledgements
The author would like to thank an anonymous referee for very valuable comments on an earlier version of this article. All errors are the author’s sole responsibility.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. Total social financing refers to the aggregate volume of funds provided by China’s financial system to the real economy within a given time-frame. Source: Wind, People’s Bank of China
2. A zombie firm is a firm that needs bailouts in order to operate, or an indebted firm that is able to repay the interest on its debts but not repay the principal. At the 2016 National People’s Congress, the Chinese government recognised the issue of the ‘Zombie Firms’ and announced that they would be either closed or reorganised by 2020 (Bloomberg News Citation2016; Reuters Citation2016).
3. Source: Commercial Bank Capital Management Measures (Trial), Ministry of Justice, China. Retrieved from http://www.moj.gov.cn/Department/content/2013-05/28/594_206338.html (in Chinese)
4. Source: Wind, People’s Bank of China
5. As of end of Q4, 2019, the balance of outstanding Chinese consumer loans (excluding auto loans and mortgage loans), auto loans and mortgage loans are around RMB 9.4 trillion, 3.4 trillion, and 30 trillion separately. Source: Wind, People’s Bank of China