China's Growing Debt Pile has a Global Impact

Will Ballard, head of Asia Pacific equities at Aviva Investors, warns emerging-market investors to beware of China’s credit cycle

Aviva Investors 14 August, 2017 | 12:31AM

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China’s debt pile is huge – and getting bigger. The Institute of International Finance, an industry body, estimates China’s total debt stood at more than 300% of GDP as of May 2017. Debt has risen by 130 percentage points of GDP since the financial crisis, much faster than in other large economies. 

For emerging-market equity investors, China’s debt mountain now resembles a Sword of Damocles dangling over their portfolios. But in fixating on China’s debt levels and the risks of an economic hard landing, investors may have missed a more pertinent danger. China’s credit cycle is starting to turn, with significant implications for investment assets across markets in Asia and beyond.

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Aviva Investors  is Aviva's global asset management business

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