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Foreign debt grows
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The country's foreign debt rose to more than $373 billion at the end of last year, up from more than $345 billion at the end of the third quarter, but the overall situation is under control, the State Administration of Foreign Exchange (SAFE) said yesterday.

The country's short-term foreign debt, which analysts say could include inflows of capital from people speculating on the yuan's appreciation, rose to $220 billion at the end of last year, accounting for nearly 60 percent of the overall foreign debt, compared with 57.2 percent at the end of last September.

The SAFE said major indices, such as the ratio of short-term debt to foreign exchange reserves, are within the safe range prescribed by international standards.

Analysts, however, warned that the increase in short-term debt could create potential risks.

In the first two months of this year, China's trade surplus was $28.1 billion, down 29.2 percent year-on-year. Its foreign exchange reserves amounted to $1.65 trillion, according to media reports, up from $1.53 trillion at the end of last year.

"The rising ratio of short-term debt, if we take into consideration the decreasing trade surplus and increase in foreign exchange reserves in the first two months, demands caution," Zhao Xijun, finance professor of the Renmin University of China, said.

(China Daily April 10, 2008)

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