The foreign debt built up by Chinese companies is about a third bigger than official data show, adding to the pressure on the country's currency reserves as a wave of repayment obligations approaches in 2020.
On top of the $2 trillion in liabilities to foreign nationals captured in official data, mainland Chinese firms have around another $650 billion in debts built up by subsidiaries overseas, according to Bloomberg calculations. About 70 percent of that debt is guaranteed by entities such as onshore parent companies and their subsidiaries, the data show. The amount of maturing debt will rise in coming quarters, with $63 billion due in the first half of 2020 alone.
The prospect of Chinese companies rushing to find dollars to service liabilities comes at a time when authorities have already allowed the currency to sink below 7 yuan per dollar amid a trade war with the U.S. The nation now risks a reprisal of what happened after the yuan's devaluation in 2015, when foreign-debt servicing contributed to a rapid decline in the country's foreign-currency reserves.