China shifted some borrowing to companies as it fought the pandemic

A new report suggests Beijing has been successful in shifting some government borrowing to the corporate sector, as it has enlisted companies to help limit economic fallout from the coronavirus pandemic, reported the Wall Street Journal.

Growth in overall debt has accelerated this year in China, as it has all around the world. But unlike last year, when government borrowing drove the rise in China’s total debt burden, the biggest driver was nonfinancial corporate debt, according to a report released Wednesday by the Washington-based Institute of International Finance.

Nonfinancial corporate borrowing soared to over 165% of China’s gross domestic product in the third quarter this year, from 150% of GDP in the year-earlier quarter, said the IIF, an association of global financial firms which bases its findings on data from international financial institutions, including the Bank for International Settlements and the International Monetary Fund, reported the WSJ.

According to the IIF’s estimate, China’s total debt topped 335% of GDP in the quarter. That compares with 302% at the end of last year. In 2011, the ratio was 200%, according to the IIF.