China Takes a Hard Look at Corporate Borrowers

The U.S. and Europe aren’t the only places where authorities are trying to wean economies off easy money. In China, policymakers and financial regulators are working hand in hand to defuse a debt bomb. But they’re doing it without resorting to big interest rate hikes that might crimp growth.

China’s total debt equaled 162 percent of gross domestic product in 2008. By 2016 it had climbed to 259 percent, an increase of more than $22 trillion, in large part because of massive corporate borrowing. And even with the current push to deleverage, it could reach 327 percent by 2022, according to Bloomberg Economics.