Economy

China’s debt on a ‘dangerous trajectory’: IMF

PTI Beijing | Updated on January 09, 2018 Published on August 15, 2017

China’s massive debt is on a “dangerous” path, raising the risk of a sharp slowdown in growth, the IMF warned today, urging Beijing to speed up structural reforms.

The International Monetary Fund, which has repeatedly warned China over its ballooning debt, said in a new report that the world’s second largest economy must turn toward a sustainable growth path.

“International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown,” IMF experts wrote.

While the country’s near—term growth outlook firmed up, it is at the cost of “further large and continuous increases in private and public debt, and thus increasing downside risks in the medium term,” the report said.

The IMF maintained its forecast of 6.7 per cent growth for this year, but the report warned that the country’s debt load could soar from around 235 per cent of gross domestic product last year to more than 290 per cent in 2022.

Debt—fuelled investment in infrastructure and real estate has underpinned China’s growth for years but Beijing has launched a crackdown over fears of a potential financial crisis.

The IMF recommended that Beijing press on with reforms to further boost consumption.

“China has the potential to sustain strong growth over the medium term,” the report said.

“But to do this safely requires accelerating reforms to rebalance towards less credit-intensive growth, while using still-sizeable buffers to smooth the transition.”

Published on August 15, 2017

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.

In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.

Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor