IMF Says China’s Credit Growth is Unsustainable

by Sue-Lin Wong, Sam Holmes

The International Monetary Fund on Friday said China needed to slow its unsustainable credit growth and stop financing weak firms.

“China’s corporate debt is still manageable, but at approximately 145 percent of GDP, it is high by any measure,” said James Daniel, IMF Mission Chief for China, in the fund’s annual review of the country.

The IMF has urged China to tackle the root causes of its credit growth risk by easing back on unsustainably high growth targets and lax budget constraints, particularly on local governments and state-owned enterprises.

“This in turn requires a comprehensive strategy and decisive measures to address the corporate debt problem,” the IMF’s Daniel said.

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