Swiss Re Says China’s Chances of a Hard Landing are 20%

Not everyone is convinced that China may come out of its economic transition unscathed.

Swiss Reinsurance is putting the risk of a hard landing in the world’s second-largest economy at 20 percent.

At the heart of its concerns is the high level of indebtedness in the economy, much of which can be attributed to state-owned enterprises (SOEs) and companies, Swiss Re’s chief economist Kurt Karl told CNBC’s “The Rundown”.

The share of debt to gross domestic product (GDP) has risen to around 250 percent, Karl said. It was 120 percent around five years ago.

“This rapid increase coupled with the fact that so much income (is used) to pay for the debt’s interest payment; (the situation) becomes stressful,” he said on Wednesday.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza