Hasenstab: How does China's debt compare to Western peers?

Michael Hasenstab, executive vice president and chief investment officer for Templeton Global Macro Group, gives his assessment of China's true debt levels.

Any discussion on the risks facing China are incomplete without a discussion of debt sustainability and the true level of debt. How will further loosening of monetary policy affect China's government bond market? China has rapidly accumulated a substantial stock of debt over the past decade, a lot of it through local governments and the shadow banking sector. At the same time, China has a very substantial amount of assets, partly in foreign exchange reserves, but mostly in the form of market capitalisation of the strongest state-owned enterprises (SEOs). In this regard, China di...