China's domestic financial imbalances at record highs: Fitch

By Mucahithan Avcioglu

ISTANBUL (AA) - International credit rating agency Fitch Ratings said Monday that domestic financial imbalances in the Chinese economy have reached historical highs due to high household savings, weak consumption, and a recent contraction in capital spending.

A Fitch report said the country’s imbalances made growth dependent on fiscal support and net trade.

Domestic financial imbalances in China have climbed to record levels, driven by persistently high household savings, sluggish consumption, and a recent decline in capital spending, the statement said.

It added that the gap between strong private savings and rising public borrowing is likely to continue, leaving economic growth increasingly reliant on external demand and ongoing fiscal support through elevated government deficits.

According to the statement, the corporate sector holds a significant net borrowing position as its investments exceed its savings. However, this is outweighed by the household sector’s substantial net lending position, reflecting consistently high savings and a sharp drop in real estate investment in recent years.

Fitch also noted that the household savings rate stood at 34.9% in 2023, remained unchanged in 2024, and increased to 35.3% in 2025 as income growth outpaced consumption.

With overall investment declining, the corporate sector’s net borrowing position has likely narrowed, further boosting the private sector’s overall net credit balance, it said.