ADB; Ferrarini, Benno; Hinojales, Marthe2021-10-052021-10-052018-01N/AN/A2313-65372313-6545https://www.adb.org/publications/state-owned-enterprises-public-debt-sustainability-prchttps://hdl.handle.net/20.500.14540/5478The size of the state-owned enterprise contingent liability in relation to the People’s Republic of China’s gross domestic product appears to be manageable if dealt with decisively and bar a continuation of the past. The leverage of state-owned enterprises (SOE) in the People’s Republic of China (PRC) has grown to a large liability. While there is no room for complacency, there is no need for panic either; even if authorities had to step in to mop up as much as 20% of SOE debt at risk gone bad. This would appear to be manageable at roughly 2.7% of the gross domestic product in 2016 or 5.5% by 2021. The paper demonstrates a method to include SOE debt as a contingent liability in the public debt sustainability assessment framework. The authors of the paper further conclude that while corporate leverage is large, it appears fully manageable.24Governance and public sector managementPublic financial management (budget)