Soaring Leverage Worries Central Bank
Amid an unprecedented deleveraging effort in China’s financial sector, the central bank remains worried: China leverage rising at ‘alarming pace’: central bank official
“China’s overall leverage level is reasonable but is rising at an alarming pace, especially in the financial sector,” Xu said. The original commentary was published in business journal Caijing Magazine.
Xu said high levels of stimulus spending from government paired with poor corporate management and financial supervision were key factors causing rising levels of leverage, Xinhua said.
He added the government should stick to “prudent and neutral” monetary policy, reduce emphasis on economic growth targets, and improve corporate governance so authorities did not have to step in so frequently to help companies out.
“Financial security is achieved via reforms, not bail-outs,” Xinhua reported Xu as saying.