China's foreign exchange watchdog, the State Administration of Foreign Exchange (SAFE), yesterday said the nation's short-term foreign debts are manageable despite rapid increases.

China's short-term foreign debts --borrowings with a maturity of one year or less -- stood at US$64.2 billion at the end of June, representing an increase of US$11.2 billion over last year.

Short-term debts volume accounted for 35.2 per cent of total foreign debts, which stood at US$182.6 billion.

That percentage is well above the 25 per cent "safe line'' which is the internationally accepted figure for risk control.

But SAFE said the situation is far less worrisome than it appears when reasons behind the increases are factored in.

SAFE said a considerable portion of the new short-term debts are credits for foreign trade, which are based on real goods transactions and have little risk. After credits for trade are deducted, the percentage of short-term debts from the total debt falls within the safe line.

Borrowings by Chinese branches of overseas banks also contributed to the increase in short-term debts, SAFE said. But these borrowings have little impact on China's foreign debt security because the head offices of the foreign banks bear the risks.

More critical, according to SAFE, is that China's affluent foreign exchange reserve can cover its borrowing capacity.

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