Foreign debt keeps snowballing, says SAFE

China's foreign debt continued to grow in the first three quarters of this year on the back of the country's robust economic expansion and strong foreign trade performance.

The State Administration of Foreign Exchange (SAFE) said Thursday that outstanding foreign debt stood at 223.273 billion US dollars by the end of September, up 15.31 percent from the end of 2003.

The outstanding volume of long and medium-term liabilities were123.619 billion dollars, or 55.37 percent of the total debts; the remaining are short-term debts that should be serviced within one year.

New borrowings from overseas totaled 124.138 billion dollars from January to September, soaring 71.27 percent on a year-on-year basis, the SAFE noted.

The rapid growth of the Chinese economy, registering a 9.5 percent for the first three quarters, required greater funding, while China's ongoing macro control, largely by bringing down monetary and investment growth, caused a funding shortage and obliged businesses to borrow from overseas, analysts said.

The yuan's much higher interest rate than US dollar and expectations for the appreciation of yuan were also important factors behind the rapid rise in foreign debts, they said.

But regulators have insisted the current level of China's foreign debts pose no risk to its financial security, given the nation's huge foreign exchange reserves, which surged to 514.5 billion dollars at the end of September.

On Thursday, the SAFE said fast growth of foreign debts from foreign banks was reined in the third quarter of 2004. By end-September, these banks had 33.107 billion dollars in foreign debts on hand, a 12.09 percent drop from three months ago.

Chinese authorities issued new rules governing foreign banks' foreign borrowings in May, requiring them to bring their outstanding loans from outside China to below the authorized ceilings by the end of 2004, and keep their short-term liabilities below the amount outstanding at the end of June before the end of the year.

The debt figures released by the SAFE do not include liabilities of Hong Kong, Macao and Taiwan.

Source: Xinhua