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 Schuldencrisis China infographic
Graphic shows breakdown of China’s debt.
GN44993NL

ECONOMIE

China schudt financieel systeem op

By Phil Bainbridge

October 30, 2023 - October 31, 2023 - China will hold its twice a decade financial policy conference as it seeks to tackle a property bubble and ballooning local government debt that could cause a crisis in the world’s second largest economy.

China’s debt has swollen to a massive 282% of GDP, less than Japan’s 375%, but where the Bank of Japan holds almost two-thirds of the debt as compared to just 21% held by China’s central government. Consequently a higher proportion is in private debt, predominantly for real estate.

Local government, encouraged by Beijing after the 2008 financial crisis to create growth, built up a huge debt for the most part via Local Government Financial Vehicles (LGFVs) for land and infrastructure investments.

With the property sector making up 29% of GDP, any downturn in the market will affect China’s growth, which will in turn affect the global economy.

Sources
PUBLISHED: 26/10/2023; STORY: Graphic News; PICTURES: Getty Images
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