Liping He, Beijing Normal University: The paper has made use of a large sample provided in the Annual Survey of Industries Firms, compiled by China's National Bureau of Statistics and covering nearly 4 million firms from 1998–2013, and the authors have conducted a detailed analysis on the debt ratio influenced by certain economic characteristics of various types of industrial firms in China. One of the important conclusions in the paper is that credit misallocation has been significant in the economy (sector) and this has led to reduced credit efficiency and economic efficiency in general in the contemporary Chinese economy.
The paper asks how we can assess the overall trend of indebtedness in China's corporate sector and whether the (rising) leverage is supported by economic fundamentals. The authors’ answer to the first question appears to be somehow different from a “popular” view that China's corporate debt in terms of its proportion...