Are the risks brought about by the increase in the balance of foreign debt controllable?

　　Our reporter Chen Guojing

　　Since the beginning of this year, my country's foreign debt has grown steadily.

According to data from the State Administration of Foreign Exchange, at the end of June, my country’s full-caliber foreign debt balance was US$2132.4 billion, an increase of US$75.1 billion or 3.7% from the end of 2019.

How do you view the increase in our foreign debt?

Is the risk controllable?

　　"The 3.7% growth rate is much lower than the nominal GDP growth rate. It should be said that this growth rate is relatively low and relatively normal," said Zhao Qingming, an expert on international financial issues.

　　External debt is the external debt of a country.

A moderate and well-structured foreign debt is conducive to a country's use of international resources for its own use, forming a virtuous circle with economic development.

"Appropriate use of foreign debt has many benefits." Zhao Qingming believes that we often say "two markets, two resources", and foreign debt is just one of these resources.

Especially in recent years, European and American countries have implemented zero or even negative interest rates, so the capital cost of borrowing foreign debt is relatively low. For some of our country's large-scale international enterprises, it is good to borrow moderately.

　　According to reports, the safety of foreign debts mainly depends on four indicators-at the end of 2019, my country's foreign debt debt ratio was 14.3%, debt ratio was 77.8%, debt service ratio was 6.7%, and the ratio of short-term foreign debt to foreign exchange reserves was 38.8%.

The internationally recognized safety lines of these four indicators are 20%, 100%, 20%, and 100% respectively. The four main indicators of my country's foreign debt are all within the safety line, and the risk indicators are stable, showing that my country's foreign debt risks are generally controllable.

　　At the same time, the scale of my country's foreign debt is far below the overall level of developed and emerging market countries.

The latest data released by the World Bank in January this year shows that in the third quarter of 2019, my country's foreign debt balance ranked 13th in the world.

The foreign debts of the United States, the United Kingdom, and Japan are 10 times, 4 times, and 2 times that of my country, respectively. Compared with countries with the same economic scale, the absolute scale of my country's foreign debt is not large.

　　In recent years, the increase in my country's foreign debt has more to reflect the confidence of foreign investors in my country's economic development.

“Overseas institutions increase their holdings of RMB bonds and other assets also form foreign debt.” Zhao Qingming said that in recent years, my country’s increase in foreign debt is largely due to the increase in foreign investors’ holdings of RMB assets. The steady growth of foreign debt also reflects the investment facilitation policy. The effect and international investors’ recognition of my country’s capital market.

　　Under the global negative interest rate environment, my country's economy has continued to recover steadily, the bond market has continued to open up, and RMB bonds have been favored by foreign investors.

In addition, as the spread between China and the United States continues to widen, the scale of non-residents’ domestic bank deposits has increased.

In the first half of this year, the balance of bond and currency deposits increased by US$37.4 billion and US$30.6 billion, respectively, and the contribution rate of the increase in the balance of external debt was 50% and 41% respectively.

Compared with the end of 2014, the proportion of debt securities balance in foreign debt balance has risen from 8% to the current 27%, accounting for more than a quarter.

　　It is worth noting that most of these foreign investors are foreign central banks and other institutions, which are long-term investors.

The purpose is to allocate assets in the long-term, not to make short-term profit as the goal, and to invest mainly in medium and long-term RMB treasury bonds, which is conducive to maintaining the stability of our foreign debt structure.

Statistics from the State Administration of Foreign Exchange show that the proportion of my country's medium- and long-term foreign debt has increased from 35% at the end of 2017 to 43% at the end of June this year. The medium- and long-term foreign debt and short-term foreign debt are "forty-six open" and the maturity structure is relatively reasonable.

　　"On the whole, the growth of the balance of foreign debt is in line with the needs of my country's economic development and continued opening up." The relevant person in charge of the Foreign Exchange Bureau told the Economic Daily reporter earlier that compared with international experience, the scale and proportion of my country's debt securities still have much room for improvement. .

The increase in the scale of debt securities means that "risk-sharing" capital inflows can serve as a stabilizer for the structure of foreign debt.

　　"Next, foreign debt will continue to grow steadily." Zhao Qingming believes that the steady growth of foreign debt is an objective need for my country's economic development.

On the one hand, with my country’s economic development, the increase in the internationalization of enterprises will increase the demand for external borrowing; on the other hand, as the level of RMB internationalization increases, external debt will also maintain a steady growth.

Therefore, there is no need to worry about the growth of our foreign debt.

On the whole, my country's foreign debt management is still relatively prudent, and there will be no sudden and substantial increase in foreign debt, and the overall growth rate will remain at a reasonable level.