China’s Debt Levels Rise Above 300% of GDP, Central Bank Signals Potential Easing Measures
China’s total debt has surpassed 300% of its gross domestic product (GDP), with expectations that the figure may continue to increase, according to Xuan Changneng, deputy governor of the People’s Bank of China (PBOC). The comments were made during a speech at the annual Boao Forum on Thursday.
Xuan noted that the ratio of broad money supply (M2) to GDP has also exceeded 200%. Both the macro leverage ratio and the M2-to-GDP ratio are trending upward as China continues efforts to support economic growth.
Despite the rise in debt, Xuan emphasized that China maintains a clear stance on adopting an appropriately accommodative monetary policy and has sufficient tools available to adjust as needed. He confirmed that the central bank would consider reducing the reserve requirement ratio (RRR) and interest rates at a suitable time. Such decisions will be based on domestic and global economic conditions, financial market trends, and other relevant factors.
Central banks globally are facing growing challenges due to geopolitical tensions, reduced international integration, and increased volatility in financial markets, Xuan added.
While the PBOC has kept key interest rates and reserve requirements steady in recent months, analysts anticipate further policy easing to address the effects of economic pressures, including recent increases in U.S. tariffs.
