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Chinese President Xi Jinping at the opening session of the Chinese People's Political Consultative Conference at the Great Hall of the People in Beijing on Saturday.   © Reuters

China's debt overhang tests Xi's 'quality growth' strategy

Solutions offered at annual congress favor state control over market mechanisms

ISSAKU HARADA, Nikkei staff writer | China

BEIJING -- China's debts are manageable, Premier Li Keqiang said at Monday's opening of the annual National People's Congress, but the mountains of debt amassed by Chinese businesses and local governments remain the biggest economic challenge facing President Xi Jinping in his second term.

China carried out a 4 trillion yuan ($630 billion at current rates) stimulus package after the 2008 global financial crisis to put the economy back on a track toward growth. But corporate debt has swelled since then amid heavy lending by state-owned banks, rising to 167% of gross domestic product by June 2016 from 97% at the end of 2007.

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