China’s ‘Sharper-Than-Expected’ Slowdown to Reverberate Global Markets

International Monetary Fund (IMF) Deputy Managing Director Mitsuhiro Furusawa said that the share of the debt Chinese companies are unable to pay off is growing.

WASHINGTON (Sputnik) – The Chinese economy’s slower-than-anticipated growth has the potential for regional and global spillovers, International Monetary Fund (IMF) Deputy Managing Director Mitsuhiro Furusawa said at a symposium on Monday.

"The outcome of China’s economic rebalancing is one of the most important risks facing the global economy," Furusawa argued. "A sharper-than-expected growth slowdown has the potential to reverberate to countries worldwide that have become closely linked to the Chinese economy."

Furusawa noted that the share of the debt Chinese companies are unable to pay off is growing.

At present, 14 percent of listed Chinese firms do not earn enough to make interest payments.

"Asia remains a key driver of global growth, but it is slowing, led by China’s deceleration toward 6 percent annual growth," Furusawa concluded.

On April 13, the IMF said Chinese banks could face a financial loss equal to 7 percent of the country’s GDP because of potential inability of local firms to repay their debts.

Decelerating growth rates have plagued the Chinese economy alongside turbulent stock markets and a falling currency. China's economy grew 6.9 percent in 2015, down from 7.3 percent in 2014, amounting to the lowest annual GDP increase in 25 years.