Corporate debt too high, warns PBOC chief

Beijing

PEOPLE'S Bank of China governor Zhou Xiaochuan sounded a warning over rising debt levels, saying corporate lending as a ratio to gross domestic product had become too high and the country must develop more robust capital markets.

China still has a problem with illegal fundraising and financial services are insufficient, Mr Zhou said in a speech at the China Development Forum in Beijing on Sunday. He said the country still needs regulation to guard against excessive leverage in foreign currencies.

"Lending as a share of GDP, especially corporate lending as a share of GDP, is too high," Mr Zhou said. He said a high leverage ratio is more prone to macroeconomic risk.

Chinese leaders are struggling to balance between meeting a target of at least 6.5 per cent average annual growth to 2020, while addressing growing debt levels. In a briefing on March 16, Premier Li Keqiang said a high corporate debt ratio "is not new in China" and China would seek to bring it down with …