Should Investors Be Worried About China's Debt Levels?

China remains a concern among investors due to its debt problem and a slowdown economy, but experts argue that they could be manageable by the country’s government

Karen Kwok 17 January, 2017 | 11:19AM

Despite a significant stock market rally in 2016, investors remain wary of China. A looming debt problem and a slowdown economy are cause for concern, but experts argue that they could be manageable by the country’s government

Chinese debt has risen to 250% of GDP since the global financial crisis in 2008. This level of domestic debt to GDP is considerably higher than other emerging markets’ levels of around 100-150%. The average developed markets’ domestic credit to GDP is at 289%.

That high level of borrowing, together with a slowdown economy, are placing stress on China’s financial system – and raising worries about its impact on the global economy. However, according to Jan Dehn, head of research at emerging markets investment manager Ashmore, concerns regarding Chinese debt are exaggerated.

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About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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