In the third quarter of 2024, China’s macro leverage ratio rose from 295.6% at the end of Q2 to 298.1%, an increase of 2.5 percentage points. The cumulative rise over the first three quarters reached 10.1 percentage points. While the year-on-year growth rate of real economy debt declined to 8.1%—a new low for the 21st century—nominal GDP growth fell even further, resulting in a passive rise in the macro leverage ratio.

The household leverage ratio declined by 0.3 percentage points, marking the second consecutive quarterly decline. Residential mortgage lending contracted for the sixth straight quarter. The July Politburo meeting emphasized the need to stabilize the real estate market, with the impact of relevant policy measures expected to unfold gradually in the coming quarters.

The non-financial corporate leverage ratio increased by 0.3 percentage points. Despite the People’s Bank of China implementing significant policy rate cuts during Q3—and a corresponding drop in market lending rates—corporate financing demand remained subdued and has yet to fully recover.

The government leverage ratio rose by 2.5 percentage points. Q3 marked the peak period for government bond issuance, although the growth rate of fiscal expenditure slowed. Further efforts are needed to accelerate the utilization of special-purpose bond funds to support economic activity.

In June 2024, the Bank for International Settlements (BIS) significantly revised its estimates of China’s macro leverage ratio since 2014, with adjustments for most years reaching around 20 percentage points. Notably, these revisions brought BIS estimates closer to China’s own figures, underscoring the reliability and credibility of domestic macro leverage assessments. This development should dispel concerns over potential underestimation in official data and calls into question the notion that international datasets are inherently more authoritative.

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