A Closer Look at China Debt
Teresa Kong, CFA, Portfolio Manager
July 6, 2016
Investors have grown increasingly concerned about the build-up of debt in China. In 2007, the nation had only US$7.4 trillion of debt, which was equivalent to approximately 158% of GDP—a number somewhat within the realms of sensible expectations. Fast forward to just mid-2014 and McKinsey estimates that Chinese debt has expanded by more than 120% of GDP and to around US$28 trillion in debt, or around 4x the quantity that existed previously. More recent estimates are obviously substantially higher, with January 2016 alone witnessing a rise of US$519 billion. Are China’s debts sustainable or a sign of serious mismanagement of its economy? In this video, Portfolio Manager Teresa Kong, CFA takes a closer look at the implications of China’s mounting debts, capital outflows and the ongoing development of China’s on- and offshore fixed income markets.
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