China falls and India rises in sovereign debt ranking

China bicyclesChina fell six places in a ranking of sovereign issuer risk because of a sharp increase in the country's debt, as measured by the International Monetary Fund (IMF).

In contrast, India rose six places to 36th, the biggest gain of any country in the index, because of optimism in its new leadership.

The dramatic leap in China's projected debt-to-GDP, from 15% to 45%, came because the IMF added local government debts to its estimates of China's total liabilities for the first time.

Responding to the new calculations, a research institute at asset manager BlackRock relegated China to 48th out of 50 in its index of sovereign issuer risk.

The BlackRock researchers made the decision even though the new debt level "would still leave China's gross debt-to-GDP ratio well below the current level of nations such as the US (105%), Japan (245%) and UK (92%)".

For India, researchers were enthused by a projected 0.9-point fall in the country's 12-month forward budget deficit, now forecast to be 4.3% of GDP.

"Reformist Prime Minister Narendra Modi and Reserve Bank of India chief Raghuram Rajan have sparked a wave of optimism on the Indian economy," says the BlackRock report. "Business confidence and growth are on an upswing, inflation is receding – and the currency has stabilised."

©2015 funds global asia

Executive Interviews

Executive interview: PGIM CEO on where the ESG flowers should bloom

Sep 27, 2021

David Hunt, president and chief executive of PGIM, tells Romil Patel about leading a top 10 global asset manager in times where “empowering and encouraging the kind of investment decisions as...

Executive interview: Nicolas Moreau’s orderly transition

Jul 12, 2021

Nicolas Moreau, CEO of HSBC Asset Management, is moving to Asia as the firm looks to connect more directly with the region’s growth story. ESG is also a key focus – including the ‘just’ carbon...


Roundtable: Singapore comes of age as an Asian ESG hub

Dec 01, 2021

Strong ESG credentials strengthen the case for Singapore as a leader in Asia of the post-Covid recovery. Our panel discusses the risks and opportunities.

Roundtable: How well geared are Japanese assets for a new world?

Jul 12, 2021

As we prepare to emerge from Covid, experts look at overcoming demographic issues through a combination of good tech and corporate governance, improving productivity and meeting an ambitious government carbon emissions reduction target. Chaired by Romil Patel.