Debt Crisis: China and Economy-Wide Debt

debt crisis: The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows, the agency said, according to The Japan Times. China's total outstanding credit surged to 260 percent of gross domestic product by the end of 2016 and the International Monetary Fund has warned that a debt crisis in the country could imperil global financial stability. The move comes as China tries to clean up a toxic brew of unregulated and risky lending that for years has fueled the economy's spectacular growth, though some analysts doubt Beijing's willingness to quit its debt addiction. The government has trimmed its 2017 growth target to around 6.5 percent after it expanded 6.7 percent in 2016, the slowest growth rate since 1990. But Moody's said it expects China's growth potential to decline to close to 5 percent over the next five years, citing diminishing investment, an accelerated fall in the working age population and a continuing dip in productivity. China's 13th Five-Year-Plan released in 2016 announced an average annual growth rate of above 6.5 percent for 2016-2020. (news.financializer.com). As reported in the news.