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The structure and sustainability of China’s debt

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  • Lixin Sun

Abstract

In this paper, using a new comprehensive debt set, we describe the evolution of China’s debt structure in detail, and then we assess the sustainability of China’s domestic and external debt by employing a fiscal space framework, the threshold estimation, and the debt service-capacity measure. The empirical results suggest that, China’s public debt from the central government and external debt are sustainable, whereas the highly indebted local governments, non-financial corporations and the shadow banks could lead to potential risk for China’s financial stability. Nevertheless, China’s debt overall is sound and sustainable in the near and medium term.

Suggested Citation

  • Lixin Sun, 2019. "The structure and sustainability of China’s debt," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(3), pages 695-715.
    • Handle: RePEc:oup:cambje:v:43:y:2019:i:3:p:695-715.
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    File URL: http://hdl.handle.net/10.1093/cje/bey030
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    Cited by:

    1. Sun, Lixin, 2019. "China’s Debt Revisited," MPRA Paper 98796, University Library of Munich, Germany.
    2. Campos, Eduardo Lima & Cysne, Rubens Penha, 2021. "Estimating debt limits for emerging countries," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 836-855.

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