China is increasing its monitoring of indebted state-owned enterprises by creating watch lists and setting alarm levels, underscoring that the government hasn’t abandoned the goal of controlling borrowing.
The government will set two debt thresholds for state-owned firms — one level would trigger alarms and the other would require higher regulatory attention. Firms with debt above those levels will be put on monitored lists and required to report reduction goals and deadlines, according to a plan for 2018 published on the National Development and Reform Commission’s website.
With the economy slowing and trade tensions rising, officials are now placing more emphasis on curbing debt at state firms and in parts of the property market. The nation’s top leadership under President Xi Jinping affirmed in a statement after the politburo meeting last week that the campaign will continue, albeit at a more measured pace.
The plan indicated that “reducing SOE debts is still the key in the deleveraging campaign this year,” said Zhu Qibing, chief macroeconomy analyst at BOC International China Ltd.