China - Foreign Debt
Written by JDPGlobal | Saturday, 02 July 2005
In 2004, China’s foreign debt went up 18 percent, (according to Chinese Central Bank Data). At the end of 2004, China’s outstanding foreign debt stood at USD 228 billion.
The Chinese government is involved with numerous methods to curb the economy from overheating. The rise in foreign debt is mainly attributable to high GDP growth in 2004 which required greater funding: the majority of which came from overseas. Many analysts believe that the Chinese yuan, (currency) has will continue to have much higher interest rates than the US dollar and expectations of a yuan revaluation were also important factors.
But, as far as Chinese regulators are concerned, they are of the view that the current level of foreign debt poses little risk to the nation’s financial security, given its huge foreign exchange reserves which surged over 50 percent to USD609 billion in 2004. According to another report, the data of the central bank shows surpluses in both current and capital accounts in 2004. Capital and financial account surpluses stood at about US$112 billion. China received US$60 billion as foreign direct investment, which is up 13.3 percent from 2003, according to the central bank.
