China

Vulnerable countries to pay record $22bn this year, mostly relating to loans issued under Xi Jinping’s belt and road initiative The most vulnerable nations on Earth are facing a “tidal wave” of debt repayments as a Chinese lending boom starts to be called in, a new report has warned. The analysis, published on Tuesday by Australian foreign policy thinktank the Lowy Institute, said that in 2025 the poorest 75 countries were on the hook for record high debt repayments US$22bn to China. The 75 nations’ debt formed the bulk of the total $35bn calculated by Lowy for 2025. “Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” the report said. The pressure to repay was putting strain on local funding for health and educatio...

A great wall of debt may not be an obstacle to Xi Jinping’s effort to boost spending in the world’s second-largest economy. By some measures, China’s president has already dug deep to prop up slowing GDP growth. Now officials are taking a broader view of the country’s balance sheet. This may open up a new fiscal chapter for the People’s Republic.Despite a de-escalation this month of a global trade war, China still faces additional 30% tariffs on its exports to the United States. A property crisis, deflationary pressure and unemployment fears mean savers are hoarding money instead of spending it. Yet there is limited space to unleash further stimulus according to orthodox rules. In the past, the State Council rarely budgeted a deficit larger than 3% of GDP, a threshold similar to th...

China’s economy has suffered from slow consumer spending and a slump in the real estate market. The unpredictable trade war with the United States risks further economic problems, but the current pause in tariff increases plus persistent stimulus from Beijing are keeping the worst outcomes at bay.Following the April meeting of China’s politburo (the executive committee of the Communist Party of China) – just a couple of weeks after the United States and China had raised tariffs on one another to considerably more than 100% – the communiqué was surprisingly sanguine. At tariff rates of 145% and 125% respectively, bilateral trade would almost certainly have collapsed in what was, in effect, more trade embargo than trade war, with damaging consequences for both sides. But with a heavy...

Car dealership groups in two provinces have gone out of business since last month in China, both of them BYD Co. retailers, evidence of the tough competition in the nation’s auto market and proof that not even selling the country’s No. 1 brand can shield businesses from financial difficulties. Car dealership groups in two provinces have gone out of business since last month in China, both of them BYD Co. retailers, evidence of the tough competition in the nation’s auto market and proof that not even selling the country’s No. 1 brand can shield businesses from financial difficulties. Xingqi Group outlets in Liaoning province have stopped delivering new cars or providing service for more than 60 customers, according to Liaoning Radio and Television Station, while more than 500 peo...

Reform, global reach and financial stability statecraft Amid developing tensions, the International Monetary Fund’s 2025 Financial Sector Stability Assessment for China arrives at a pivotal juncture. More than a domestic stocktake, it reflects the structural transformation of China’s financial system, marked by increased complexity, persistent contradictions and a steadily expanding global footprint – much of which is mediated by Chinese financial institutions. This year’s assessment invites further scrutiny of the system’s evolving resilience and policy trade-offs. Having contributed to China’s inaugural Financial Sector Assessment Program in 2010, which played a key role in helping China embark on financial reforms in the following years, I recall one main thing...

The European economy grew at around 2 to 3 per cent a year throughout the 1990s and early 2000s. But growth has never fully recovered from the 2008 financial crisis. While Europe continues to rank highly on broader measures of wellbeing, its meagre growth has fallen well behind that of the US. Europe also faces considerable economic headwinds. China is ramping up exports of goods such as cars and machinery, threatening a pillar of the European economy. Europe also lags behind China and the US in technology creation and diffusion, just as a potential artificial intelligence (AI) revolution might unlock new productivity gains. European policy-makers are making trade conditional on other policy aims, like combatting climate change, trying to make supply chains in important goods less dep...