Graphic: Little trouble in big China?
The case can be made that the while Chinese economy is slowing, it is in a “wait and see” period, while the economic reforms take hold. A corporate debt bubble appears to be forming with advancing debt balances, but banks there are sitting on more deposit capital than most of their developed market peers.
Stable GDP: China's annual GDP rate has been stable since falling from 2009's recovery. Market reforms aimed at transparency have investors watching and waiting, preparing for growth opportunities.
Greater leverage: Just over half of debt is held by banks that can now set their own loan rates, while assuming the related risks. So far, 2017 has already had $1.3 billion in defaults vs. $616 million in 2016.
Socking more away: Capital for corporate debt issuances is drawn in large part from consumer deposits. China's population saves more than three times more than that of residents of developed countries. With bank deposits 190% of the country's GDP in 2015 (60% in the U.S), the capital is there to fuel growth and companies are using it.
Sources: Bloomberg LP; Organization for Economic Cooperation and Development; World Bank; Ashmore Group
Compiled and designed by Charles McGrath and Gregg A. Runburg
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