China’s level of leverage is rising at an “alarming pace” - PBOC

The official Xinhua news agency cited Xu Zhong, head of the People’s Bank of China’s (PBoC) research bureau, as saying, “China’s overall leverage level is reasonable, but is rising at an alarming pace, especially in the financial sector and the country deleverage at a “proper pace” to reduce financial sector debt and avoid systemic financial risk.

Key quotes

High levels of stimulus spending from government paired with poor corporate management and financial supervision were key factors causing rising levels of leverage

Financial security is achieved via reforms, not bail-outs

The government should stick to “prudent and neutral” monetary policy, reduce emphasis on growth targets and needs to improve corporate