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China's borrowed foreign debt last year double its overseas borrowing in 2003, largely as a result of rapid economic growth and expectations of an appreciation of its currency, the renminbi.
Foreign borrowing surged 102.8 per cent year-on-year in 2004 to US$205.9 billion, the State Administration of Foreign Exchange (SAFE) said yesterday.

The figure includes borrowing by the Chinese Government, local businesses and foreign businesses operating in the country, as well as trade credits.

Repayments totalled US$185 billion, up 99.15 per cent from the previous year, while interest payments - US$5.2 billion -changed little from 2003, the administration said.

Net foreign debt inflow for the year, or new borrowing minus repayments and interest payments, stood at US$15.7 billion, jumping 360 per cent from the previous year.

Outstanding foreign debts were US$228.6 billion at the end of last year, up 18.06 per cent year-on-year.

"Foreign debt inflow multiplied, total foreign debt increased rapidly, and the proportion of short-term debts continued to climb," SAFE said in a statement.

San Feng, an analyst at the State Information Centre, said the rapid foreign debt inflow was not a particular cause for concern given the relatively low base figures in previous years. "But if it continues to emerge as a trend, we need to pay some attention to this."

The Chinese Government's ongoing macro-economic management, aimed at containing rapid credit and investment growth, caused funding shortages at domestic enterprises last year and fuelled their demand for foreign cash, he said, adding businesses typically had ample funding in earlier years.

China's economy expanded by a sizzling 9.5 per cent last year on the back of frenzied investment and credit growth, which prompted worries about overheating.

The SAFE said the rapid increases in foreign debts posed no threat to China's financial security, since all key indicators are under internationally accepted safety limits.