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We need to reduce financial leverage: China's central bank deputy governor

A separate report on Saturday by Xinhua on how the country's 2016 central government budget was spent illustrates the scale of the issue Beijing faces


Chinese currency, China, China economy
File photo: Illustration photo of a China yuan note. Photo: Reuters

must proactively but gradually reduce debt in the to prevent the buildup of financial risks, state news agency quoted China’s central bank’s as saying on Saturday. Yi Gang made the comments at a meeting about China’s in Beijing, said. “We have to resolutely fight the battle to prevent risks and first have to control overall by proactively, safely and steadily deleveraging,” he said. China’s state planner in September said that the growth of China’s overall ratio has clearly been slowing and is now stabilising.

However, ratings agency has said that China’s attempts to reduce debt risks so far this year were not working as quickly as expected. A separate report on Saturday by on how the country’s 2016 central was spent illustrates the scale of the issue faces. Hu Zejun, head of the National Audit Office, said in the report a government-organised team had terminated or amended 25.35 billion yuan ($3.86 billion) worth of illegal local authority debts and was working on a program to resolve a further 28.37 billion yuan worth of debts. The country has launched policies aimed at reducing debt and amid fears that such problems could derail the world’s second-largest if not handled properly. A statement issued on Wednesday after China’s annual economic conference, which is attended by China’s top leaders and keenly watched by investors for clues on policy priorities, however, made no mention of the need to lower corporate leverage, in contrast to last year’s readout. The state planner said in August that such efforts had elicited some results but that excessively high ratios of Chinese firms had still not been reversed, with non-financial Chinese firms’ ratios still the highest among the world’s top economies.

First Published: Sun, December 24 2017. 01:18 IST