Â
>>REAL-TIME UPDATES IN THE WIRE. CLICK HERE<<<
Â
Â
China’s macro leverage ratio climbed by 2.1 percentage points to 283.9% in the second quarter of the year from the 281.8% in the previous quarter, according to data released by the National Institution for Finance & Development of the Chinese Academy of Social Sciences, a leading government think tank.
In breakdown, the leverage for the household sector grew by 0.2 percentage point to 63.5% from 63.3%; non-financial corporate sector’s leverage rose by 0.8 percentage point to 167.8% from 167%; while the government sector’s leverage ratio rose by 1.1 percentage point to 52.6% from 51.5%, showed the data.
In the first half of the year, China’s macro leverage ratio climbed by 10.8 percentage points, of which, the ratio for the non-financial corporate sector rose by 6.9 percentage points, government sector by 2.3 percentage points and household sector by 1.6 percentage points, according to the report
The slowdown in the rise of leverage was partly due to the slower growth of debt. The real economy’s outstanding debt at the end of the second quarter stood at 351.5 trillion yuan, rising by 9.3% from a year earlier, slowing from the 10.1% growth in the first quarter, according to the data.
Despite the slower debt growth, the rising downward pressure on the economy kept the macro leverage ratio in an uptrend, it noted.
The private sector’s expectation for the future economic growth remained weak and the household sector and the corporate sector voluntarily repaired balance sheets, which limited financing demand and led to slower growth in debt, money supply and total social financing, dragging lower the growth of macro leverage ratio, said the report.
In the second half of the year, the macro leverage ratio is expected to increase further and the full-year rise is expected to exceed 11 percentage points, with the rise in the last two quarters of the year to be 2 – 2.5 percentage points and around 2 percentage points, respectively, according to the report.
While the government sector’ leverage rate rose by the most among different sectors in the second quarter, it’s still lower than expected and the scale of fiscal policy was limited, and the ratio is expected to rise further in the third quarter, showed the report.