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Foreign debt snowballed in 2004 China's foreign debt continued to grow in 2004 on the back of the country's robust economic expansion and strong foreign trade performance, according to a central bank report released Thursday. The People's Bank of China, the country's central bank, said that outstanding foreign debt stood at US$228.6 billion at the end of last year, up 18.1 percent from a year earlier. The outstanding volume of short-term liabilities, which should be serviced within one year, reached US$104.3 billion, US$27.3 billion more from the end of 2003, accounting for 45.6 percent of the total debts; the remaining are long and medium-term debts. The rapid growth of the Chinese economy, registering a stunning 9.5 percent for 2004, required greater funding, while China's ongoing macro control caused a funding shortage and obliged businesses to borrow from overseas, largely by bringing down monetary and investment growth, analysts said. The renminbi's much higher interest rate than the US dollar and expectations for the appreciation of the local currency were also important factors behind the rapid rise in foreign debt last year, they said. But regulators insisted the current level of China's foreign debt poses little risk to the nation's financial security, given its huge foreign exchange reserves, which surged to US$609.9 billion by the end of last year. Chinese authorities issued new rules governing foreign banks' foreign borrowings last May, requiring them to bring their outstanding loans from outside China to below the authorized ceilings by the end of 2004, and keep their short-term liabilities below the amount outstanding at the end of last June before the end of the year. The debt figures released by the central bank do not include the liabilities of Hong Kong, Macao special administrative regions and Taiwan Province. |
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