Is China's debt driving it to a financial crisis?

Beijing

CHINA'S debt pile has long been on economists' radar with risks ranging from a full-blown financial crisis and a crash of the real-estate market to stagnant long-term growth.

Despite repeated calls for Beijing to keep its debt in line, little has been done on the ground as credit expansion and GDP (gross domestic product) growth still remain the government's priorities.

Deleveraging will undoubtedly be painful in the short term, leading to thousands of bankruptcies, millions of jobs lost and lower economic growth.

Much of China's recent economic resilience - GDP grew 6.9 per cent in the first half of this year - has relied on debt, some of which will be toxic.

So while China is well within its growth targets, the International Monetary Fund estimates the country's total non-financial sector debt, including corporate, government and household debt, will reach almost 300 per cent of GDP by 2022, up from 242 per cent in 2016. According to S&P, Chinese corporate leverage …