MNI BRIEF: Debt Won't Hamper China’s Growth, Ample Govt Assets

China’s growing debt will not severely hamper economic growth as the government's relatively healthy balance sheet helps offsets any issues, said Li Yang, chairman of National Institution for Finance and Development, told the China Development Forum 2023 on Saturday.

China's debt, particularly local government debt, is an issue that needs to be addressed in the next phase of development, but the scale of the government's assets and the proportion of GDP they account for is getting higher, which provides a base and means for solving the debt issue, he said, adding authorities could cover the debt with assets in an effective way via asset management and swaps.

While China's debt is rising, the debt ratio and and debt servicing ratio are within globally accepted international safety lines, he said, calling for efforts of global cooperation and macro policy coordination.

Rapid changes in interest rates in the major economies have led to a sharp falls in various financial assets, which in turn triggered a comprehensive balance sheet recession. Higher rates present a dilemma for the US and the world, has they contributed to the collapse of Silicon Valley Bank and a series of domino events in the global financial market, Li said.