China's Debt Challenge
Since the Global Financial Crisis, the stock of debt in China has expanded at an extraordinary rate and an unprecedented scale. This has been most pronounced in the corporate sector, where debt outstanding as a proportion of GDP has increased from around 85% in 2008 to over 150% today.
With the Chinese economy slowing and corporate profitability under pressure, non-performing loans (“NPLs”) in the banking sector are starting to build. This has prompted fears of a potential banking crisis in China, similar to the experience of the late 1990’s NPL cycle.
In this seminar, Adam Millhouse, Associate Director in Commodities and Global Markets Division, Macquarie, and David Millhouse, co-founder and Head of China Research at Forsyth Barr Asia, spoke on some of the key areas of risk and potential bad debt costs to the banking system. They also discussed recommendations to help manage the coming NPL cycle in China. Both Adam and David are graduates of the MS in Global Finance program (Class of 2016).