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Debt growth for Chinese companies has slowed to the lowest rate in more than a decade, according to Reuters analysis, which could provide relief for policymakers worried about the fallout from years of loose lending practices across the economy. But this growChina tightens reins on debt and raises spectre of slowdown
Debt growth for Chinese companies has slowed to the lowest rate in more than a decade, according to Reuters analysis, which could provide relief for policymakers worried about the fallout from years of loose lending practices across the economy. But this growing caution about taking on new debt, along with tighter profit margins and slowing revenue growth, could point to rising risks facing the world’s second largest economy amid fears of a slowing growth. The overall debt levels of Chinese companies grew three percent in the first quarter of this year, according to analysis by Reuters of 1,843 firms listed in Shanghai and Shenzhen, the slowest pace in at least 13 years. Combined total debts – including borrowing via loans and bond issuances – amounted to $2.1 trillion at the end of March, the slowest pace of growth year-on-year since at least 2005, the analysis showed. That amount was down 6.2 per cent from the fourth quarter, a steep drop after companies ramped up leverage during 2017. Revenue growth, meanwhile, more than halved to 12.3 per cent in the first three months of 2018 from 26.7 per cent a year ago. Net profit margins were also squeezed to their lowest level in two... Read more