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China to further reduce corporate debt levels, sees some progress

Chinese authorities aim to push companies to further reduce debt levels, although some progress has been made in its deleveraging drive, the body in charge of state planning said.

"We have seen initial results in lowering corporate leverage, and debt risks have been effectively controlled," the National Development and Reform Commission said on its website, according to Reuters.

The country's
nonfinancial companies' debt levels are still among the highest of the world's top economies, it said, adding that the government will improve governance structures at state-owned enterprises to promote lower leverage.

China will use also market-based and legal means, including debt-for-equity schemes, to address "zombie companies," the commission said.

China's debt-to-GDP ratio rose to 257% at the end of 2016 from 244.9% a year ago. On a quarterly basis, the rate of rises in China's debt levels slowed to 1.6 percentage points in the fourth quarter of 2016 from 1.9 percentage points in the third quarter, according to Bank for International Settlements data cited by the commission on its website, and reported by Reuters.

Corporate debt was equivalent to 166.3% of GDP at the end of 2016, according to the BIS.