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Standard & Poor’s lowered its credit rating on China’s sovereign debt by one step to A+ on Thursday. The cut is the first ratings reduction since 1999. S&P cited the risks from the growing debt levels in China’s government and corporate sector as grounds for the lower rating.

Back in June the Institute of International Finance warned that The household debt-to-GDP ratio in Chinas had hit an all-time high of over 45% in the first quarter of 2017. In addition estimates based on monthly data showed that China’s total debt surpassed 304% of GDP. In August the International Monetary Fund reported that nominal credit to the nonfinancial sector had more than doubled in the last five years and that the total domestic nonfinancial credit-to-GDP ratio increased by 60 percentage points to about 230% in 2016. Total debt, the IMF forecast, would climbed to 300% of GDP in 2022.

One consequence of the rising debt levels is that China is using new debt relatively inefficiently. In 2015-16, the IMF estimates, it took 20 trillion yuan in new debt to raise nominal GDP by just 5 trillion yuan.