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A Closer Look at China Debt

Teresa Kong, CFA, Portfolio Manager

July 6, 2016

Investors have grown increasingly concerned about the build-up of debt in China. In 2007, the nation had only US$7.4 trillion of debt, which was equivalent to approximately 158% of GDP—a number somewhat within the realms of sensible expectations. Fast forward to just mid-2014 and McKinsey estimates that Chinese debt has expanded by more than 120% of GDP and to around US$28 trillion in debt, or around 4x the quantity that existed previously. More recent estimates are obviously substantially higher, with January 2016 alone witnessing a rise of US$519 billion. Are China’s debts sustainable or a sign of serious mismanagement of its economy? In this video, Portfolio Manager Teresa Kong, CFA takes a closer look at the implications of China’s mounting debts, capital outflows and the ongoing development of China’s on- and offshore fixed income markets.

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The views and information discussed in this video are as of the date of issue, are subject to change and may not reflect the presenters’ current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles.

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