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.
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