State-Owned Enterprises Leverage as a Contingency in Public Debt Sustainability Analysis: The Case of the People’s Republic of China

Publication | January 2018

The size of the state-owned enterprise contingent liability in relation to the People’s Republic of China’s gross domestic product appears to be manageable if dealt with decisively and bar a continuation of the past.

The leverage of state-owned enterprises (SOE) in the People’s Republic of China (PRC) has grown to a large liability. While there is no room for complacency, there is no need for panic either; even if authorities had to step in to mop up as much as 20% of SOE debt at risk gone bad. This would appear to be manageable at roughly 2.7% of the gross domestic product in 2016 or 5.5% by 2021. The paper demonstrates a method to include SOE debt as a contingent liability in the public debt sustainability assessment framework. The authors of the paper further conclude that while corporate leverage is large, it appears fully manageable.


  • Introduction
  • Debt Sustainability Analysis with State-Owned Enterprise Contingent Liabilities
  • State-Owned Enterprise Debt at Risk: Data Sources and Definitions
  • State-Owned Enterprise Contingent Liabilities Projections and Fan Charts
  • Conclusion
  • Appendixes

Additional Details

  • Governance and public sector management
  • Public financial management
  • China, People's Republic of
  • 24
  • 8.5 x 11
  • WPS189202-2
  • 2313-6537 (print)
  • 2313-6545 (electronic)

Published Versions

Ferrarini, Benno and Marthe Hinojales. 2019. "State-Owned Enterprises and Debt Sustainability Analysis: The Case of the People’s Republic of China." Journal of Asian Finance, Economics and Business 6 (1): 91–105.

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