Could this drag down the world's second largest economy?
Since the mid-2000s, Chinese corporate debt has risen sharply as a proportion of GDP — from around 100 per cent to 164 per cent in 2015. By comparison, this ratio is 67 per cent in the United States and 103 per cent in Japan. The rapid buildup of debt has prompted concerns regarding China’s financial and macroeconomic stability.
The rise in corporate debt has been most pronounced for state-owned firms and is frequently attributed to the credit-fuelled macroeconomic stimulus following the 2008–09 global financial crisis. These countercyclical policies are widely thought to have favored state-owned enterprises at the expense of the private sector.