Rising debt represents a threat to China’s growth in the medium term, the International Mining and Resources Conference in Melbourne was told today.
This debt may soon reach levels of around 300 per cent of GDP which will reduce China’s capacity to borrow if stimulus is needed to maintain GDP growth in future, said Greg Pan, President and CEO of China Hangking Holdings.
He forecast China would continue to follow expansionary policies for at least the next few years in order to meet the promised target of doubling its 2010 GDP by 2020.
Notwithstanding this risk, the IMF remains sanguine about the immediate future. he said. The IMF predicts average growth of 6.4 per cent a year through to 2021, he said. Growth last year was 6.0 per cent, though estimates put the current level at near 6.8 per cent, in part due to Government macro-economic reforms.
Mining stocks, Mr Pan said, were at last recovering after five years of a bear market. However, iron ore remained in oversupply with quality becoming a critical factor for suppliers. He suggested iron ore prices in the order of US$60-$70 a tonne for the year ahead.