China central bank executive says he’s ‘not too much worried’ about nation’s economy
A SENIOR Chinese central banker said on Tuesday he was not overly worried about his country’s economy, although “structural issues” remained in some local government debt.
People’s Bank of China Deputy Governor Zhang Qingsong told the Hong Kong Monetary Authority’s (HKMA) Global Financial Leaders Summit the overall debt of the Chinese government is in the mid-to-lower range by international standards.
The summit, in its second year, had some of China’s senior regulators meeting with chief executives from major Western banks and business officials.
“Global investors have some concern about the Chinese economy, including the pace of economic recovery, problem with the property markets and local government debt,” Zhang said.
“You may ask me, are you worried? No, not too much.”
China is grappling with an economic slowdown and a massive debt crisis in its property sector that has crippled some of its biggest developers, scared off investors and triggered fears of contagion.
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Zhang said China’s debt levels, compared to international standards, were also not overblown.
The Chinese government’s leverage ratio stood at 79.4 per cent as of the first quarter of 2023, Zhang said, which was lower than many advanced economies.
“We all believe that the overall debt level of the Chinese government is in the middle to lower range by international standards,” he said.
“Local government debt is a structural issue as most debts are issued by governments in eastern and central provinces where the size and growth of economic output outperformed others; that means they have a strong ability to serve their debt.”
China has told state-owned banks to roll over existing local government debt with longer-term loans at lower interest rates, two sources with knowledge of the matter said, as part of Beijing’s efforts to reduce debt risks in a faltering economy.
Debt-laden municipalities represent a major risk to the world’s second-largest economy and its financial stability, economists said, amid a deepening property crisis, years of over-investment in infrastructure and huge bills to contain the Covid-19 pandemic.
Beijing has sought to breathe life into China’s beleaguered property market and broader economy with a raft of measures that have so far done little to boost demand.
On Monday, balance of payments data showed China recorded its first-ever quarterly deficit in foreign direct investment (FDI), underscoring capital outflow pressures Beijing faces.
Speaking at the same finance event in Hong Kong, China Securities Regulatory Commission Vice-Chairman Wang Jianjun said China will be more actively participating in the international regulation of capital markets.
China faces a daunting task in trying to revive growth after a brief post-Covid-19 bounce in the wake of persistent weakness in the crucial property industry, a faltering currency and weak global demand for its manufactured goods. REUTERS
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