Centrum Stosunków Międzynarodowych - 11 June 2016: Serious Reforms should be committed by China to get out from to Corporate Debt

Presently, China is situated in a disadvantaged position because of its ponderable amount of Corporate Debt. According to data from International Monetary Fund (IMF), Chinese Corporate Debt composes about 145% of GDP, which is too much anyway. At the same time IMF reports that total Chinese debt is about 225% of GDP. Mathematically the situation looks like 225(total)=145(corporate)+40(governmental)+40(households). The equality above is a good tool to see graphically, that Corporate Debt is the biggest part of the whole Chinese debt.

According to “Investopedia”, currently China is the World`s second economy in terms of nominal GDP.

As it is an acute pain for such influential economy, let`s define what Corporate Debt is: “Non-government debt securities. Short term corporate debt is issued as commercial paper whereas long-term debt is issued as bonds.” – Business Dictionary.

In some extend China faced a number of Challenges, which has contributed to economic slowdown, but fortunately the situation is manageable.

Regardless China was always unique at some extend, its situation is not unique as history knows a lot of similar situations. Looking at the background scholars propose some lessons to learn, which is described here in chapter “Lessons from International Experience.”