In the wake of Beijing's stimulus-led recovery from the COVID-19 pandemic, China's debt burden has further increased, stressing a financial system still struggling to manage an unprecedented debt expansion following the 2008 global financial crisis, US-China Economic and Security Review Commission (USCC) said in its 2021 Annual report to Congress on Wednesday.
In 2016, China's financial regulators launched a deleveraging campaign amid fears over growing instability in the financial system. China's debt has continued to balloon, however, particularly over the past year as the Chinese Communist Party used fiscal stimulus measures to address the economic slowdown caused by COVID-19, the 551 pages report of the USCC stated.
The USCC is a bipartisan commission created by Congress to monitor and report on trade, economic, and defence issues in the US-China relationship.
By the end of the fourth quarter of 2019, China's total credit reached 262.9 per cent of its GDP at USD 37.2 trillion (RMB 259 trillion), up from 178.8 per cent at the end of 2010, according to data from the Bank for International Settlements, it read.
China's debt growth accelerated between the end of 2019 and the end of 2020, rising to 289.5 per cent of GDP.
In December 2020, China's former finance minister Lou Jiwei said government debt would "increasingly become a threat to future fiscal stability and economic security" of China, the USCC said.
The Chinese government has continued to emphasise the importance of debt reduction, listing deleveraging as one of the "five major tasks" for the year in the March 2021 government work report, according to the report.
( With inputs from ANI )
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