Declining growth efficiency led to rising leverage rate: analyst
11 December, 2018
Over the past ten years, one of the most important reasons for China’s rising leverage rate is the decline in economic growth efficiency, said Zhang Ming, chief economist at Ping An Securities, The Paper reported.
It was inevitable for China to invest a lot of credit resources, as lending from banks is the major financing channel in the country, Zhang said.
Thus, in future, it is necessary to strengthen supervision in order to prevent further increases in debt, and the government must also accelerate domestic structural reforms.
The latter includes the ownership reform of state-owned enterprises, land system reform and the opening up of the service industry.
“If these reforms are carried out, we may be able to avoid the outbreak of a systemic financial crisis and cross the middle-income trap to become a developed country,” Zhang said.
TAG(s):