China Leverage Ratio Falls as Government Tries to Rein in Risks

China’s leverage ratio fell by 2.6 percentage points in the first quarter from the end of last year, as authorities repeatedly signaled the need to repeal stimulus measures deployed last year.

The country’s macro leverage ratio -- the percentage of debt in households, non-financial enterprises and governments to gross domestic product -- fell to 276.8% in the first quarter, according to preliminary calculations released by the People’s Bank of China.

“As the impact of the Covid-19 epidemic gradually weakens, economic growth stabilizes, total debt matches with economic growth, it is expected that the macro leverage ratio will remain basically stable this year,” according to the PBOC report.

China has vowed to stabilize its macro leverage ratio and lower the government debt ratio this year to rein in risks.

The macro leverage ratios for non-financial enterprises, government and households were 160.3%, 44.5%, and 72.1% respectively in the first quarter.

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