China's debt levels pose stability risk- IMF

Omkar Godbole FXStreet Contributor

Comments from International Monetary Fund (IMF) are crossing the wires via LiveSquawk and theGuardian -

China should put less emphasis on targets for growth.
The system’s increasing complexity has sown financial stability risks.
Credit growth has outpaced GDP growth, leading to a large credit overhang.
The credit-to-GDP ratio is now about 25% above the long-term trend, very high by international standards and consistent with a high probability of financial distress.
As a result, corporate debt has reached 165% of GDP, and household debt, while still low, has risen by 15 percentage points of GDP over the past five years and is increasingly linked to asset-price speculation. The buildup of credit in traditional sectors has gone hand-in-hand with a slowdown in productivity growth and pressures on asset quality.
China should form a financial stability sub-committee.
China's regulators should reinforce the primacy of financial stability over development goals.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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