High leverage risks mainly exist in China's SOEs, local governments: report

BEIJING -- China's State-owned enterprises (SOEs) and local governments remain the major places for high leverage risks, Shanghai Securities News reported Saturday.

Almost 60 percent of China's debt comes from the State-owned enterprises and government, the Shanghai Securities News quoted Zhang Xiaojing, an expert with the Chinese Academy of Social Sciences, as saying.

The overall leverage ratio of the country's real economy in 2018 was around 243.7 percent, among which the household leverage ratio was 53.2 percent, non-financial enterprises leverage ratio 153.6 percent, and government leverage ratio 37 percent.

The leverage ratio of China's State-owned enterprises was 103 percent last year, according to the newspaper.

Zhang said that high leverage risks in the SOEs and local governments were due to the outdated system, including soft budget constraint and debt bailout from the central government.

China needs to push forward deleveraging with steady progress. The country should let the inefficient, especially the "zombie enterprises", go bankrupt and reshuffle, and let the market play its role, Zhang said.