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China says debt risk for main state firms is controllable

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The debt risk for China's main state-owned enterprises (SOEs) is controllable as their asset-liability ratios continue to fall, state news agency Xinhua said on Friday, citing the state-owned Assets Supervision and Administration Commission.

[BEIJING] The debt risk for China's main state-owned enterprises (SOEs) is controllable as their asset-liability ratios continue to fall, state news agency Xinhua said on Friday, citing the state-owned Assets Supervision and Administration Commission.

At the end of 2016, the asset-liability ratio for the country's main SOEs fell 0.3 percentage points on-year to 60.4 per cent, the third year in a row it has declines, Xinhua said in a brief report.

"Debt risk is generally controllable," it added, without elaborating.

Debt has emerged as one of China's biggest challenges, with the country's total load rising to 250 per cent of gross domestic product (GDP) in 2015.

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Chinese companies sit on US$18 trillion in debt, equivalent to about 169 per cent of GDP, according to figures from the Bank for International Settlements. Most of it is held by state-owned firms.

While many state companies are bloated and inefficient, China has relied on them more heavily over the past year to generate economic growth in the face of cooling private investment.

REUTERS

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