Finance minister says China can handle government debt risks

China's Finance Minister Xiao Jie waves as he arrives for a press conference on the sidelines of the National People's Congress at the media center in Beijing, Wednesday, March 7, 2018. Xiao tried Wednesday to defuse concern over the country's rising debt, saying government borrowing is below danger levels and regulators can prevent financial system risks. (AP Photo/Andy Wong)

China's finance minister has tried to defuse concern over its rising debt, saying government borrowing is below danger levels and regulators can prevent financial system risks

BEIJING — China's finance minister sought Wednesday to defuse concern over the country's rising debt, saying government borrowing is below danger levels and regulators can prevent financial system risks.

Xiao Jie's comments follow Beijing's criticism last year of global rating agencies that cut its credit rating due to China's total government and corporate debt burden. Chinese regulators are trying to curb reliance on debt to support economic growth and clear away unpaid loans but private sector analysts warn they might be moving too slowly.

The portion of China's debt that is owed by the government declined to the equivalent of 36.2 percent of annual economic output at the end of 2017, down 0.5 percentage points from a year earlier, according to Xiao. He said that was safely below an international "warning level" of 60 percent.

The minister made no mention of corporate borrowing that makes up most of a total Chinese debt burden estimated to have risen to at least 270 percent of gross domestic product, close to the level of developed economies.

By strictly enforcing debt and budget rules, "we are fully able to ensure there is no systemic risk," said Xiao at a news conference held during the annual meeting of China's ceremonial legislature.

The Moody's and Standard & Poor's agencies cited total corporate, household and government debt in cutting Beijing's sovereign credit rating last year.

Beijing argued that viewpoint ignored the strength of China's economy, among the world's best performers last year with 6.9 percent growth.

Also Wednesday, Xiao said Beijing will maintain a "proactive fiscal policy," or spending to support economic growth, despite cutting its target for this year's budget deficit. The move is part of long-term efforts to encourage domestic consumption and reduce reliance on trade and state-led investment.

Premier Li Keqiang, the top economic official, announced a deficit target of 2.6 percent on Monday, down from last year's 3 percent. Private sector analysts say that likely will drag on an economy that has depended partly on government stimulus to achieve growth targets.

This year's spending is due to rise 7.6 percent over 2017, Xiao said. He said that includes large investments in building public works and other activity that will support the economy.

"The orientation of a proactive fiscal policy has not changed," the minister said.

You may also like these

China launches second space station, Tiangong 2

Sep 15, 2016

China has launched its second space station in a sign of the growing sophistication of its...

Global markets mixed after Wall Street loss

Dec 23, 2016

Asian markets are mostly lower while Europe has gained in early trading ahead of the Christmas...

DEA opens shop in China to help fight synthetic...

Jan 6, 2017

The U.S. Drug Enforcement Administration plans to open a new office in southern China and, at...

China pledges further cuts in excess steel, coal...

Jan 10, 2017

China's top economic planner has pledged to continue cutting steel and coal production, which have...

China state media call Trump's Taiwan strategy...

Jan 16, 2017

China's state-run media says President-elect Donald Trump "speaks like a rookie" and called his...

Sign up now!

The Financial Capital is your independent source for finance information and advice. We provide insights and offer advice from financial experts so you can make the best decisions.

Contact us: sales[at]thefinancialcapital.com