Is China's economic situation serious?
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Even as China posted a 2.3 per cent growth in 2020&mdash;one of the few countries to have managed to do so amid the Coronavirus pandemic, its former finance minister Lou Jiwei said that China&#39;s fiscal situation &#39;extremely severe&#39;. Lou said the Covid 19 induced global economic slowdown, China&rsquo;s own ageing population along with rising domestic debt levels have become a cause for concern.</p>
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Lou was China&rsquo;s finance minister between 2013 and 2016. According to the South China Morning Post (SCMP), the former minister said that the country&rsquo;s fiscal revenue was expected to be stuck at a low level in the coming five years, with no sign of the government cutting back its spending.&nbsp; &nbsp; &nbsp;</p>
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&ldquo;The fiscal difficulties are not only a near-term or short-term issue, but also will be serious in the medium term,&rdquo; SCMP quoted Lou as saying.</p>
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China&rsquo;s debt level has been steadily rising. Another report published last month by the news organisation noted that the Chinese state owned firms registered a default of $11.1 billion — 51 per cent of all defaults last year. The Hong Kong based newspaper said that this was &ldquo;the largest default total for state firms since China first allowed onshore bond defaults in 2014, according to data published by the government linked think tank National Institution for Finance &amp; Development (NIFD).</p>
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Lou also warned that the &ldquo;emerging market countries are facing a double blow to both their economies and finances, with the economic risk transforming into fiscal and financial risks, raising the risk of a debt crisis.&rdquo;</p>
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