BOAO, China (Reuters) – China’s overall level of debt has topped 300% of GDP and is likely to climb further, but the central bank will continue to ease policy when needed, Xuan Changneng, deputy governor of the People’s Bank of China, said on Thursday.
“China’s stance on implementing an appropriately loose monetary policy is clear, and there is ample room for monetary policy manoeuvres,” Xuan said at the annual Boao Forum.
“The ratio of M2 (money supply) to GDP has exceeded 200%, and the macro leverage ratio has surpassed 300%, with both indicators continuing to rise further”.
China’s macro leverage ratio, which measures the economy’s overall indebtedness, has been rising steadily as the government seeks to bolster economic growth.
Xuan reiterated that the central bank would cut the reserve requirement ratio and interest rates at an appropriate time, depending on domestic and international economic and financial conditions, as well as the performance of financial markets.
Central bankers worldwide face “unprecedented” uncertainties due to the impact of geopolitics and de-globalisation, and increased global financial market volatility, Xuan added.
Analysts expect China’s central bank, which has kept its key interest rates and RRR – the amount of cash that banks must hold as reserve – steady in recent months, to ease policy further as the economy feels more of a pinch from rising U.S. tariffs.
(Reporting by Kevin Yao and Binbin Huang. Editing by Christian Schmollinger and Mark Potter)
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