China’s Debt Revisited

This paper updates the dataset on the structure of China’s debt published in Sun (2015, 2019) with the debt effects. The new dataset extends the sample to the end of 2018 including the collected annual and the estimated quarterly data covering the period 1985-2018, and presents the updated changes in deleverage ratios for all debt categories in China. In addition, we examine the effects of the debt on the monetary policy transmission and the macroeconomy in China with the GMM approach and a VAR model. We find that the monetary policy transmissions have been weakened in times of high indebtedness by both the public and the private debt despite at the heterogenous magnitude. Our study sheds new lights to policy design and debt management in China