Tuesday, May 31, 2016

Debt Strategy

China plans to boost government debt to help reduce the load of business debt, but don’t expect any sudden changes. The country’s total debt is 2.5 years of GDP and is expected to grow to 3 years of GDP in the next four years despite incremental policy changes. The high levels of business debt in China are worrisome to ecoomists, and debt is growing faster than the economy is growing, leading some to describe the Chinese economy using colorful phrases like “debt-fueled binge.” While the problem is obvious enough, the solution is not, and policymakers are taking a cautious approach.

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