China strives to improve SOEs' health

BEIJING - The Chinese government has stepped up a crackdown on State-owned enterprises debt to prevent systemic financial risks infecting the broader economy. A recent State Council meeting agreed the work would be a priority in the ongoing campaign to bring down debt levels of SOEs administered by the central government, amid improving corporate performance.

Central SOEs have made headway in cutting outdated capacity, reining in debt risks and improving competitiveness. Given the favorable conditions, more effort is needed to cut the debt level of SOEs and a guideline will be formulated, according to the meeting.

China's non-financial SOEs have a high rate of leverage. Data from the Chinese Academy of Social Sciences showed that the leverage ratios of financial institutions and non-financial institutions were 21 percent and 156 percent respectively at the end of 2015. The Economic Information Daily reported earlier that SOEs were responsible for about 60 percent of China's corporate debt.