China’s finance authorities have issued a warning to mainland investors that offshore debt remains a significant concern, and that they should be wary of “blindly” taking on credit.
The National Development and Reform Commission (NDRC) and Ministry of Finance released a notice entitled “Strictly Preventing External Debt Risks and Local Debt Risks,” outlining requirements to allow “international capital market’s low-cost financing to better support the transformation and upgrading of (China’s) real economy and advance supply-side structural reform.”
The notice lists as an aim to “prevent companies from blindly increasing leverage again and to reduce repayment risk for offshore bonds,” analysts at Caixin report.
Beijing is worried that its crackdown on domestic means of fundraising is driving companies offshore to take on debt. So far in 2018 Chinese companies have issued $171.7 billion in offshore debt, a 78% increase compared to the same period in 2017, while sales for last year as a whole doubled from 2016 to $153.8 billion.