Bank warns of Beijing threat

SURGING debt in China is putting the world economy at risk, a top Bank of England official has warned.

The Asian nation now owes £26trillion to creditors – with private sector debt at 203pc of its annual economic output.

Bank of England deputy governor Sir Jon Cunliffe, among those tipped as a possible successor to governor Mark Carney, warned the Chinese credit boom has now surpassed levels where other countries had experienced a crash in the past.

And he said that a sudden slowdown in growth could trigger a collapse with ramifications around the world, because of China’s key role in global trade.

Speaking at a conference in London, Cunliffe said: ‘The largest increases have been in the corporate sector, mainly in state-owned enterprises, but more recently household debt has begun to grow quickly.

‘A sharp slowdown in economic growth would make China’s elevated debt levels significantly less sustainable.

‘The impacts could be expected to spill over to wider financial stability.’ His comments came as Christine Lagarde, the managing director of the International Monetary Fund, urged China and the US to end their trade war.

Speaking after US president Donald Trump threatened China with punishing tariffs on another £250bn of its exports, Lagarde said: ‘We thought this threat was waning and relations were improving and we were moving toward an agreement. We hope that is still the case but today’s rumours, tweets and comments are not very favourable.’