China bubble about to burst? IMF urges China to tackle ‘high’ corporate debt immediately.

  • Lipton, No. 2 official, says problem is serious and growing
  • China’s challenges are manageable, growth strong, he says


The International Monetary Fund’s No. 2 official urged China to take immediate steps to tackle rising corporate debt or risk “dangerous detours” during the country’s transition to a consumption-oriented economy.

“Corporate debt remains a serious — and growing — problem that must be addressed immediately and with a commitment to serious reforms,” David Lipton, the IMF’s first deputy managing director, said in a speech to an economics conference on Saturday in Shenzhen, China.

The comments build on other recent warnings from the global crisis lender about China’s debt, including an estimate of a possible $1.3 trillion in loans extended to borrowers that don’t have sufficient income to cover interest payments. China has accumulated debt faster than any Group of 20 nation over the past decade, climbing to 247 percent of gross domestic product, according to Tom Orlik, an economist for Bloomberg Intelligence.