The shine of China’s economy disappeared in no time, debt burden increased:

The debt burden on the government in China is increasing. Economic activities in the country are sluggish due to the Zero Covid policy. Because of this, the revenue of provincial and local governments has decreased. Due to this situation, they run their business by taking more loans. According to a new report by the Bank for International Settlements (BIS), the amount of debt in the non-financial sector in China has reached $51.87 trillion. This is 295 percent more than China’s gross domestic product (GDP). After 1995, China had never incurred so much debt.

According to the Beijing-based think tank National Institution for Finance and Development, the amount of debt in China reached a high level in late 2020. Now it has become more than that. This institute says that although the epidemic has been a major reason for increasing debt, China’s long-term prospects are also not improving. It is feared that with the decreasing population, the expenditure on social security on the government will increase, for which it will have to raise resources by taking loans.

China’s economy deteriorated due to the lockdown.

According to experts associated with the institute, the repeated lockdowns in different cities have had a very bad effect on China’s economy. In the quarter from April to June this year, China’s economic growth rate was only 0.4 percent. Amid the economic slowdown, the Chinese government has increased investment in infrastructure projects. For this, also he had to take a loan. This year it will have to take a new loan of $57 billion.

 

 

The government debt to GDP ratio increased by 6 percent

It has been revealed in the BIS data that the government has the main share in the increased debt in China. As of June this year, the government debt ratio to GDP had increased by six percent compared to the end of 2020. China’s private sector has become reluctant to invest amid a slowing economy.

According to data from the People’s Bank of China, a sharp decline in bank loans is expected in the second half of 2022. The decline in bank credit is believed to be directly related to the decline in investment. Private sector investment in fixed assets grew by two percent from January to October this year.

 The property sector is in trouble.

Common families also do not seem willing to take loans. There has been a huge decline in the loan taken to buy a house. The Chinese government took some such steps in 2020, due to which the property sector became in trouble. Home sales have been sluggish since then. Many experts blame President Xi Jinping’s policies for the growing economic crisis in China.

The Chinese government has launched a crackdown on companies and markets in several sectors. Its primary target has been big private sector companies. But experts say that in the long run, China will have to pay a high price for these actions. Meanwhile, the US has accelerated the sanctions on China. This will also affect the Chinese economy.

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