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Chinese investors favor tight controls to curb rising corporate debt, S&P says

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Chinese investors favor tight controls to curb rising corporate debt, S&P says

Chinese debt market participants favor administrative solutions to rein in ballooning corporate debt over a general monetary tightening, a 200-person survey by S&P Global Ratings showed.

Survey respondents thought supply-side reforms were needed to curb wasteful investment spending and borrowing habits at unprofitable firms kept going thanks to loan rollovers and other types of support, the report said.

Chinese authorities intensified their crackdown on shadow banking and financial crime in 2017, but the regulators selectively eased household credit conditions, and governments and state-owned companies have been borrowing to boost stimulus spending, S&P said.

The policy saw the country's absolute debt levels continue to rise, along with its overall debt-to-GDP ratio, the rating agency commented.

The survey report added that most respondents think China still has another five to 10 years to fix its rising debt levels and a strong majority do not expect a banking crisis in the next three years.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.