0816 GMT - China's reflation process will likely be prolonged and interest rates could head lower for longer after years of a debt boom, Goldman Sachs analysts say in a research note. The GS analysts say growth typically decelerates toward the end of large-country debt booms due to weak demand. Meanwhile, the large debt overhang and a deceleration in growth put pressure on central banks to lower rates to facilitate debt repayment and support economic activity, they say. China's debt level rose significantly in the 2010s due to accumulation by real estate developers, local governments and households, GS says. Although Beijing has strived to keep leverage stable since 2016, it has risen again over the past two years, with GS expecting China's nonfinancial debt-to-GDP ratio to reach 307% by end 2024. (sherry.qin@wsj.com)
(END) Dow Jones Newswires
December 11, 2024 03:16 ET (08:16 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.