China's short-term foreign debt hits new high

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BEIJING, Aug 1 (CEIS): China's short-term foreign borrowing as a proportion of its total outstanding foreign debt has hit a record 57.5 per cent by the end of March.
At the same time, the country's total outstanding foreign debt increased by 8.57 billion US dollars to 331.56 billion US dollars, according to the State Administration of Foreign Exchange (SAFE).
Meanwhile, China's short-term foreign borrowing jumped by seven billion US dollars to 190.63 billion US dollars, rising as a proportion of total debt by 0.65 of a percentage point in three months.
Experts warned the short-term debt growth and the proportion growth indicated an active trans-border capital flow and may bring more pressure to bear China's fast-growing economy.
The country's gross domestic product (GDP) rose 11.5 per cent in the first half, after it grew 11.9 per cent in the second quarter.
Despite a series of measures to curb excess liquidity, such as interest rate hikes and reserve requirement ratio rises, China's benchmark Shanghai Composite Index on the Shanghai Stock Exchange continues to surge.
Due to the yuan's continuous appreciation and the booming stock and property markets, speculators were pouring cash in, said Ding Zhijie, vice director of the School of Banking and Finance of the University of International Business and Economics.
By the end of March, trade credit, a channel speculators prefer to use to maneuver trans-border capital flow, amounted to 108.6 billion US dollars, a rise of 4.6 billion US dollars from the end of last year.
"It is difficult to identify how much idle capital has come in, but there's no doubt that speculative funds remain unabated in entering China," said Ding.