Chinese leverage ratio swells at slower rate in Q2

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BEIJING
China’s leverage ratio increased slightly in the second quarter of the year, according to a report released by the National Institution for Finance & Development. The overall leverage ratio, which measures the nation’s outstanding debt in the real economy against nominal GDP, rose to 249.5 percent in the second quarter, up 0.7 percentage points from a quarter earlier.
The second quarter’s increase narrowed from Q1’s rise of 5.1 percentage points, data from the report showed. The report attributed the downturn to a falling corporate leverage ratio, which decreased by 1.1 percentage points to 155.7 percent in Q2.
With looming downward pressures, the report suggested authorities strike a balance between controlling leverage and stabilizing growth, via measures including moderately increasing the central government leverage ratio and advancing structural reforms.

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