The leverage ratio of China’s real economy increased last year, according to a report released by the National Institution for Finance and Development.
The overall debt ratio of households, non-financial enterprises and governments rose to 245.4 percent in 2019, up 6.1 percentage points from the previous year.
The rise followed a debt growth slowdown in 2017 and a leverage level drop in 2018. But the increase rate was much lower than that from 2008 to 2016, providing evidence that the country is determined to deleverage.
The pickup was mainly driven by households’ debt ratio, which rose 3.7 percentage points year on year to 55.8 percent in 2019. Debt ratio of the Chinese government increased 2.1 percentage points during the period, the report said.
The non-financial enterprises’ debt ratio went up merely 0.3 percentage points during the same period, it said.
With looming downward pressures and the impact from the novel coronavirus outbreak, the report predicted China’s leverage in real economy would rise by 10 percentage points in 2020.