China's short-term foreign debt ratio climbs and short-term cross-border capital may increase

Industry insiders believe that this means that the short-term cross-border capital entering our country may be increasing somaly (reporter Somaly) foreign exchange yesterday released data showing that as of the end of September 2010, China's external debt balance of 546.449 billion U.S. dollars (excluding Hong Kong and Macao), while the proportion of short-term foreign debt continues to climb to 67.61%. From the balance, the external debt balance grew by 6.4% in late September last year, compared with a 16% increase in late June compared with the end of March. US dollar debt accounted for 71.91%, down 0.19% from the end of the second quarter, while euro and yen debt rose slightly.　　With the outbreak of the financial crisis, China's external debt balance in the fourth quarter of 2008 and the first quarter of 2009, a two consecutive quarterly decline in the second quarter of 2009 began to slowly rebound. It is noteworthy that the proportion of short-term external debt remains large, with the short-term external debt remaining at $369.441 billion trillion at the end of September, representing 67.61% per cent of the external debt balance, up from 66.91% at the end of June. Industry insiders believe this means that short-term cross-border capital inflows into China may be on the rise, and that the potential risks are rising further.　　From the international experience, the ratio of short-term foreign debt accounted for between 20% to 25% is a relatively safe range, our country is much higher than this level.　　Among the short-term foreign debt, trade credits accounted for 59.52% and trade finance accounted for 18.65%, which accounted for 78.17% of the short-term external debt balance. The chief economist of Societe Generale Capital Operation Center, Lu Commissar, said that the short-term external debt balance will appear so obvious rise, is driven by two factors.　　On the one hand, exporters are more likely to cover local currency bags and trade in foreign currencies in the context of strong expectations of a stronger renminbi, while foreign currency loans, especially U.S. dollar loans, have increased in 2010, thanks to state control over credit. "This is mainly related to the rapid development of foreign trade in recent years," said the agency. Due to the fact that trade credit and trade finance have real import and export trade transactions, the external debt risk will not be increased.