According to Gabriel Wildau writing for the FT, one Chinese debt analyst believes China’s debt could be much higher than the government is reporting.
Charlene Chu tells Wildau that the amount of bad debt in China could be $6.8 trillion more than the official figures. Wildau writes:
“Everyone knows there’s a credit problem in China, but I find that people often forget about the scale. It’s important in global terms,” Ms Chu said in an interview by phone from New York.
Ms Chu left Fitch in 2014 to help launch the Asia operation for Autonomous Research, which specialises in analysis of financial institutions.
In her latest report, Ms Chu estimates that bad debt in China’s financial system will reach as much as Rmb51tn ($7.6tn) by the end of this year, more than five times the value of bank loans officially classified as either non-performing or one notch above. That estimate implies a bad-debt ratio of 34 per cent, well above the official 5.3 per cent ratio for those two categories at the end of June.
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