It has been announced that even though China has a serious amount of debt, and that it is rising continuously, it is very much controllable. This statement comes from the Foreign Control Regulator. All indicators have stated that the debt remains well within the safety standards. By the end of last year, the debt that China had stood at a whopping 1.71 trillion dollars. This ultimately means that it has increased by a total of 294.8 billion dollars in the space of just under a year. This means that the debt ratio to GDP is 14%. If you were to look at the ratio of shorter-term external debt in terms of the foreign exchange reserves, you’ll see that this stands at 35%. This data is brought to you by SAFE.
A lot of investors are worried about the debt that China has, and with it increasing by the quarter, it is safe to say that it showed no signs of slowing down. The debt is apparently because of stable economic growth. SAFE has also said that the yuan exchange rate’s two-way movement has also increased as well, and the governmental policies that are going to help facilitate cross-border financing have also been monitored. The country is going to keep on improving the prudential policy that focuses on capital flow over the short-term, while also supporting local banks. This does prevent a lot of risk while also helping to serve their own local economy the best way they can.
This news comes after the China Huaron Asset Management Company moved to create an online platform that would help bad debt transactions, while also helping people to dispose of any bad or distressed debt that they have. This is the first platform of its kind to be devoted to bad debt transactions and it is also going to help the economy as well.
Big things are happening in China, and there is no telling as of yet how this is going to have a knock-on effect on the currency or the trading industry.