Just an alarmist rumor to claim country on brink of financial crisis

WITH THE FAST RISE OF ITS LEVERAGE RATIO, some have expressed concern that China is on the verge of a debt or financial crisis. Economic Daily comments:

Statistics of the Bank for International Settlements indicate that the leverage ratio of China's nonfinancial enterprises soared from 96 percent in 2008 to 166 percent in 2016.

Yet it is worth pointing out that the problem is a characteristic of China's current stage of development. Indirect financing (bank credit loans) is the main form of financing in China, accounting for 70 percent to 90 percent of the market, as direct financing remains less developed. This unavoidably pushes up the leverage ratio of the whole financial sector.