Centre for Economic and Regional Studies Hungarian Academy of Sciences Centre of Excellence

Economics with policy - International seminar series

05/07/2015

Lecture:

Yu Yongding
China's corporate debt: causes and implications

 

Abstract:

According to Minsky (1992), financial instability is a result of the fact that cash flows from operations are not sufficient to fulfill either the repayment of principle or the interest due on outstanding debts. After the 2008 Global Financial Crisis, China’s total debt-to GDP ratio has risen rapidly. China’s corporate debt is particularly worrying. According to a study by Chinese Academy of Social Sciences, for China’s nonfinancial corporates as a whole, the debt-to-GDP ratio was 113 percent by the end of 2012. According to Standard and Pool, by the end of 2013, the total debt of China’s nonfinancial corporates was $14.2 trillion dollar, which has surpassed America’s $13.1 trillion and became the largest in the world. However, despite the large number of research on China’s debt issues in general, and corporate debt issue in particular, all researches we are aware of are descriptive, and there are almost no studies that give the trajectories of Chinese corporate debt-to-GDP ratio with specific numbers. The few studies that come out with some numbers are result of extrapolations based on very strict assumptions.
The profitability of China’s industrial enterprises is falling continuously, the borrowing costs for industrial corporates is in the rise, China’s capital efficiency are deteriorating. Finally China’s growth target is 7%. What are the implication of these development on China’s corporate debt-to-GDP ratio? To answer this question, a dynamic model is created to figure out the possible trajectories of China’s corporate leverage ratio. The presentation will introduce the specification of the model and data-mining and process for the simulation. The conclusion of the study is that despite the fact that China’s savings rate is very high and hence China’s ability to digest debt is strong, if China fails to reverse the current deterioration of major indicators of economic efficiency, the rapid rise in China’s corporate leverage will cause serious trouble for China’s financial stability.

Helyszín: Budapest XI., Budaörsi út 45. VIII/807. (conference room).

Serbia and Montenegro: A Step Closer to Reaching EU Accession?

05/18/2015

The CEU Center for EU Enlargement Studies (CENS) and the Institute of World Economics,

Center for Economic and Regional Studies of the Hungarian Academy of Science

cordially invite you to the international conference:

 

“Serbia and Montenegro:

A Step Closer to Reaching EU Accession?”

Central European University, Budapest

Nádor utca 9, Monument Building, Popper Room

 

18 May (Monday) 2015, 9:00 am - 16:30 pm

About the event:While Croatia joined the EU in 2013, progress toward the accession of the other non-EU states in the Western Balkans has varied from country to country. The accession negotiations with Montenegro and Serbia are ongoing. The two countries are the only non-EU Western Balkan countries which have effectively made progress on their journey towards EU membership. Nevertheless, the progress of Montenegro and Serbia to a point where they are now tangible candidates for membership shows that the grip of anti-enlargement attitudes amongst EU Member States is perhaps waning. The benefits for the EU to enlarge to the Western Balkans, particularly in solidifying stability in the region and extending a zone of peace and prosperity to South East Europe, arguably outweigh the purported costs of accession. The one-day international conference will explore the following: political challenges (democracy, rule of law and corruption, visa-free travel); economic challenges (competitiveness of Serbia and Montenegro and the rest of the region, challenges and risks of joining the single market); social challenges (unemployment, migration, civil society).

RSVP: Hana Semanić at semanich@ceu.edu

Helyszín: Central European University, Budapest Nádor utca 9, Monument Building, Popper Room