China debt-laden corporates may pose contagion risk if economic conditions worsen

China’s debt-laden corporates, which make up more than 30 per cent of global corporate debt, pose a contagion risk if global economic conditions worsen, a newly-published report from S&P Global Ratings’ global research team warns.

“With nearly a third of global corporate debt, China’s challenge is the world’s challenge,” said S&P Global Ratings senior research fellow Terry Chan.

China’s US$28 trillion of corporate debt is estimated at around 140 per cent of gross domestic product (GDP) and is the largest among countries. In contrast, total US corporate debt is US$19 trillion, or around 75 per cent of the country’s GDP. Almost 50 per cent of China’s corporate debt is of high risk or worse, more than double the US’s.