FX.co ★ China’s debt increases despite government’s efforts

According to the latest estimates, China’s overall debt is now as much as three times the size of its economy. In September, the debt of the Chinese companies rose at the fastest pace in four years despite the government’s commitment to limit the use of the borrowed funds.

The total debt of 2,146 Chinese firms at the end of September rose by 23% from a year before, marking the highest pace of growth since 2013. The analysis excluded companies, which have been subject to major efforts by the government to deleverage and reduce risks.

The housing sector witnessed the fastest pace of debt growth over the past five years, followed by industrial companies.

In September, state-owned enterprises (SOEs) reported a relatively faster pace of growth in their debt. The total debt at 75 of the CSI Central SOE 100 index companies advanced by more than 27% from a year earlier, the biggest rise in many years.

Currently, debt servicing costs take about a fourth of state-owned firms' revenues, indicating the extent of the debt problem.

Since the middle of 2016, outstanding household consumer loans have soared by almost 30% to 30.2 trillion yuan in October.

In November, the Chinese regulators hammered out sweeping rules to rein in financial risk in the country's $15 trillion market for asset management products and take measures to curb property speculation.