Chinese Company Debt Is at ‘Alarming Levels,’ Xinhua Says

Chinese companies have accumulated “alarming levels” of debt and will have difficulty with payments in an economic downturn, Xinhua News Agency said, citing Li Yang, vice president of the Chinese Academy of Social Sciences.

The debt-to-asset ratio of Chinese companies is about 105.4 percent, the highest among 20 countries examined in yearlong study by Li’s team of borrowing by China’s government, corporations and individuals, Xinhua reported.

Chinese companies tend to borrow from banks instead of raising funds in capital markets, Li said, as cited by Xinhua.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

To contact the editor responsible for this story: Joshua Fellman at jfellman@bloomberg.net

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