China needs bond market reforms as soaring debt poses significant longer-term risk to the country, according to S&P Global.
"Policymakers understand the need to simultaneously control leverage and sustain economic growth" to manage systemic risks over the long-term, the analysts noted. As a result, have tightened local government financing in recent years. Pushing ahead with bond market reforms may be necessary to "concurrently" tackle those challenges, as it could lower debt levels over the long term, the report said.The rating agency predicted China's general government debt could surge to 61.3% of GDP this year, from 56.1% in 2023 — deteriorating from 38.5% in 2019.
In its latest report, S&P highlighted China's "extraordinary credit expansion," due to high investment and lower financing efficiency as one of the major factors for fueling Beijing's debt problems.The property market slumped after Beijing's crackdown on developers' high reliance on debt in the last three years. A protracted property downturn has not onlyChina also said it will improve the long-term mechanisms for preventing and controlling risks.