NDLI: State-Owned Enterprises Leverage as a Contingency in Public Debt Sustainability Analysis: The Case of the People's Republic of China

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State-Owned Enterprises Leverage as a Contingency in Public Debt Sustainability Analysis: The Case of the People's Republic of China

Content Provider	Scilit
Author	Ferrarini, Benno Hinojales, Marthe
Copyright Year	2018
Description	Journal: SSRN Electronic Journal We reflect state-owned enterprises’ (SOE) leverage within the standard debt sustainability assessment framework. Based on company data and the interest coverage ratio as a measure of debt at risk, aggregate baseline projections and fan charts gauge SOE debt as a contingent liability to the public sector. We find that SOE leverage in the People’s Republic of China has grown to a large liability that deserves the urgent attention it has been receiving from the authorities. While there is no room for complacency, there is no need for panic either; even if authorities had to step into mop up as much as 20% of SOE debt at risk gone bad, this would appear to be manageable at roughly 2.7% of the gross domestic product in 2016 or 5.5% by 2021. These findings are reflective of discretionary assumptions about future developments in the SOE sector and the broader economy—including baseline conditions premised on preventive government action to slow borrowing—that are adjustable to reflect analysts’ prerogatives and expectations.
Related Links	https://www.econstor.eu/bitstream/10419/203374/1/1014310628.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3187981
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3187981
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2018-01-01
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Area Studies Contingent Liabilities Corporate Leverage People's Republic of China Public Debt Sustainability State-owned Enterprises
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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