The structure and sustainability of China’s debt

Lixin Sun

Cambridge Journal of Economics, 2019, vol. 43, issue 3, 695-715

Abstract: In this paper, using a new comprehensive debt set, we describe the evolution of China’s debt structure in detail, and then we assess the sustainability of China’s domestic and external debt by employing a fiscal space framework, the threshold estimation, and the debt service-capacity measure. The empirical results suggest that, China’s public debt from the central government and external debt are sustainable, whereas the highly indebted local governments, non-financial corporations and the shadow banks could lead to potential risk for China’s financial stability. Nevertheless, China’s debt overall is sound and sustainable in the near and medium term.

Keywords: Debt Structure; Debt Sustainability; Public and Private Debt; China’s Economy (search for similar items in EconPapers)
Date: 2019
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