Aggregated Debt at the Modern Stage of the PRC's Economic Development: Analysis of Key Factors and Risks

This article analyzes the debt of the China's economy by segments that accumulate it: households, the corporate non-financial sector, and central and local governments. The article also shows the dynamics of debts to GDP ratios starting from 2018, in regards of external shocks and China's internal economic policy, as well as in comparison with other countries. China is in the Top-10 countries in terms of debt to GDP ratio, and ahead of all developing countries. The main borrower is the non-financial corporate sector, followed by provincial governments, if special local government financing vehicles (LGFV) are included, and households. The increase in households' debt helps to stimulate China's internal consumption, important for the economy's transformation. At the same time, high interest payments may have the opposite effect. The increase in the corporate non-financial sector's debt has already caused major bankruptcies and tightening of such borrowings' regulation. Most risks are seen in regard to the local governments' debt, as it is caused by systematic issues related to the budget control.

China, economy, debt burden, household debt, corporate debt, local governments' debt