One of the leading credit rating agencies, Standard & Poor's, reported on China's corporate debt. The analysis showed that the Chinese businessmen’s debt hit the record sum of 16.1 trillion US dollars. It equals practically 160% of the country’s GDP. Outside observers recommend the Chinese government to focus on the problem solution, otherwise the economy would suffer a hard landing. In the current conditions, it is getting more and more difficult to settle debts for companies’ owners.
At the moment, China is experiencing a period of economic slowdown, consequently, most companies are sustaining losses. Revenue is slowing, producer output prices are falling, but debts keep on rising. Experts at Merrill Lynch suppose that China’s situation is much more difficult than in the US, thus, the debt market managing is even more dangerous.
Several weeks ago, the Chinese stock market lost 3.2 trillion dollars of capitalization as a result of a rough slump. The SZSE Component Index dropped by 12% making companies stop trading their stocks.
