Recent suggestions to solve China’s massive corporate debt through swaps and securitization are grabbing headlines, but the measures could make the problem worse, experts at the International Monetary Fund (IMF)said in a blog post on Tuesday.
China’s bulging private debt pile has come under scrutiny in recent months as the world’s second-largest economy continues to slow. The IMF estimates corporate debt in China at 160 percent of GDP, “which is very high compared to other, especially developing, countries,” the IMF’s James Daniel, Jose Garrido and Marina Moretti wrote in a blog post on Tuesday.
Rating agencies Moody’s Investors Service and Standard & Poor’s have taken note: both trimmed the outlook on China’s sovereign debt rating to negative last month.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.