China's Foreign Debt Risk Remains Under Control, SAFE Says
Du Chuan
/SOURCE : yicai
China's Foreign Debt Risk Remains Under Control, SAFE Says

(Yicai Global) July 18 -- All major indicators show that China's external debt remains within internationally recognized safety parameters and the risk is controllable, a spokesperson for the State Administration of Foreign Exchange said today.

The level of debt remains lower than that of other developed countries and emerging markets, Wang Chunying said in response to a question from Yicai Global at a press briefing today.

China's foreign debt rose 12 percent year on year to USD1.96 trillion at the end of last year. It rose 0.3 percent to USD1.97 trillion at the end of March, data shows.

While China's foreign debt has grown steadily, it is very much under control, Zhao Qingming, chief economist at the research institute of the China Financial Futures Exchange, told Yicai Global.

The foreign debt to gross domestic product ratio was 14.4 percent at the end of 2018, well within the internationally recognized safe limit of 20 percent.

The debt ratio and debt service ratios were 74.1 and 5.5 percent respectively, within the safety limits set at 100 percent and 20 percent. The ratio of short-term foreign debt to foreign exchange reserves was 41.4 percent, well below the safety level, Wang added.

The structure of foreign debt has been optimized and stability has been enhanced. China's medium and long-term foreign debt at the end of the first quarter was 49 percent higher than at the end of 2014, accounting for 36 percent of all foreign debts, some 9 percentage points higher than that at the end of 2014. The short-term foreign debt meanwhile fell by 4 percent.

Debt securities at the end of the first quarter doubled from the end of 2014, accounting for 23 percent of the total and up 15 percentage points. This reflects overseas investors' need for diversified allocation.

Chinese financial bonds were mainly bought by overseas central banks, reflecting their need for increased holdings of yuan, Wang said.

Editor: Xu Wei

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Keywords: SAFE , Foreign Debt