China’s crackdown on lending risk and the possible slowdown in debt growth could push Chinese GDP lower by 1 percentage point over the medium term, Fitch Ratings said on Monday.
Key quotes (Source: Reuters)
It is hard to put a precise time frame on when China will start to see the deleveraging of the real economy, but at some point, it looks inevitable.
The scenario analysis we have undertaken suggests that, when it does occur, it will be a process that will be a significant drag on growth.
Fitch’s scenario analysis suggests that to stabilize corporate debt to GDP ratio by 2022, business investment growth would have to fall by 5 percentage points per year – which would, in turn, reduce GDP growth by just over 1 percentage point over the next few years.
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