"China continues to enjoy robust economic growth, but will face a major challenge. Strategically, the biggest threat to China is a huge corporate debt in the country". This is the conclusion of the US-China Commission in the annual report delivered to the Congress.
"China's rapid increase in debt levels increases the risk of instability in the country's financial markets, which can quickly dent global markets. The rapid increase in corporate debt stands at 169 per cent of GDP and raises serious concerns about the sustainability of the country's economic growth. The International Monetary Fund has warned, in its annual review of the Chinese economy, that the increase in China's corporate debt is a serious, growing problem that must be addressed immediately. The potential losses deriving from badly managed corporate loans have a value equal to 7 per cent of GDP".
The US-China Commission also notes Beijing's constant military expansion. "It could have a devastating impact in cultural, political and military terms. China will continue to try to exploit the opportunity to build military facilities abroad, as was the case for the Djibouti outpost. As we reported in May last year, China is working hard to secure a base in a remote, tiny, eastern African state, a French colony for a long time. China has also expressed interest in a military presence in the Maldive Islands. The increased military presence abroad reflects China's interest and willingness to use its strength to defend its growing assets outside national borders. Global security activities will probably continue to increase to protect Chinese citizens and interests abroad".
The report notes that the Chinese army continues to be very active abroad. In the 2016, China activated an anti-piracy redeployment in the Gulf of Aden, increased support for UN peacekeeping operations and conducted assistance and humanitarian relief missions in Nepal. "China has intensified military exercises with other countries. From the end of the 2015 to today, China has participated in eleven large bilateral and multilateral exercises with countries around the world. Military sales are another growing component: between the 2011 and the 2015 China stood as the third largest exporter of arms in the world after the United States and Russia".
(photo: Ministry of National Defense of the People's Republic of China)
