Balance between stable growth and leverage stabilization: a tough challenge amid the novel coronavirus shocks

ZHANG Xiaojing1 LIU Lei1

(1.Institute of Economics, Chinese Academy of Social Sciences)

【Abstract】High debt ratio has often been followed by crises or recessions, seen whether from the 800-year debt history or from the four global debt waves since 1970. Changes in China’s macro leverage ratio have also been cyclical, rising by 100 percentage points from 2008 to 2016. Since 2017, the country’s macro leverage ratio has stabilized between 240% and 246% for 12 consecutive quarters. The novel coronavirus pneumonia outbreak in 2020 has a significant impact on debt and GDP. We estimate the nominal GDP growth rate may decline to around 6% in 2020; the debt growth rate will increase, and the macro leverage ratio may eventually rise by about 10 percentage points. Policy priorities will continue to focus on the dynamic balance between stable growth and leverage stabilization, including stabilizing aggregate demand through reform rather than stimulus, tolerating a moderate increase in macro leverage ratio, properly matching resource allocation with risk allocation, and targeted deleveraging in the public sector, especially SOEs and LGFVs.

【Keywords】 debt cycle; macro leverage ratio; novel coronavirus shocks; stable growth;


【Funds】 The National Social Science Fund of China (19AJL006) The National Social Science Fund of China (19ZDA095)

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(Translated by LIU Qianqian)


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This Article


CN: 11-3799/F

Vol , No. 02, Pages 81-100+6

March 2020


Article Outline



  • 1 Debt wave and leverage cycle from a global perspective
  • 2 Latest progress of China’s leverage ratio
  • 3 Impact of epidemic shocks on macro leverage ratio
  • 4 Difficult balance between stable growth and stable leverage
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