Fall­ing Lever­age Ra­tio

Beijing Review - - THIS WEEK ECONOMY -

The lever­age ra­tio of China’s fi­nan­cial sec­tor con­tin­ued to fall in the sec­ond quar­ter of the year, re­treat­ing to 2014 lev­els, ac­cord­ing to a lead­ing Chi­nese think tank.

The ra­tio, mea­sured by as­sets, de­creased to 64.3 per­cent at the end of the sec­ond quar­ter from 69.7 per­cent at the end of 2017, ac­cord­ing to a re­port from the Chi­nese Academy of So­cial Sci­ences (CASS).

Mean­while, the lever­age ra­tio mea­sured by debt dropped to 61.6 per­cent from 62.9 per­cent, the re­port said, not­ing that stronger reg­u­la­tion is ac­cel­er­at­ing the delever­ag­ing process of the fi­nan­cial sec­tor.

While the house­hold lever­age ra­tio rose 2 per­cent­age points in the first half of the year, the lever­age ra­tios of non-fi­nan­cial en­ter­prises and the govern­ment fell, the re­port showed.

House­hold lever­age in­creased at a slower rate than in the same pe­riod last year, point­ing to low risks in house­hold debts, ac­cord­ing to Liu Lei, a re­searcher with the Cen­ter for Na­tional Bal­ance Sheet un­der the Na­tional In­sti­tu­tion for Fi­nance & De­vel­op­ment of the CASS.

“With house prices sta­bi­liz­ing, the house­hold lever­age ra­tio is ex­pected to sta­bi­lize in the fu­ture,” Liu said.

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