China's US$17 trillion debt mountain isn't as scary as it looks

(June 6): There’s been no shortage of bad news when it comes to China’s massive debt pile, from turbulence in the corporate bond market to last month’s sovereign rating downgrade by Moody’s Investors Service.

But look beyond the negative headlines, and one encouraging fact stands out: China’s biggest companies are healthier than they’ve been in years.

Thanks to a combination of economic stimulus and state-owned enterprise reform, debt-to-equity ratios at China’s largest non-financial firms have dropped to the lowest levels since 2010. Gauges of profitability and interest payment capacity are the strongest in at least five years, while free cash flows have never been bigger.

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