A teller counts cash at a bank branch in Hangzhou, capital of East China’s Zhejiang province. [Photo by Hu Jianhuan/For China Daily]

China’s economy continues to recover from the COVID-19 pandemic, but the government should be wary of potential debt risks in 2021, an executive of China Chengxin International Credit Rating Co said.

Yan Yan, chairman and CEO of the credit rating company, said at a forum held in Shanghai on Thursday the Chinese economy faces multiple challenges ahead. External uncertainties in the development of the pandemic remain, and domestic consumption which is expected to drive the economy is still relatively weak.

Yan said the macro debt ratio has climbed as governments issued more bonds to stabilize sectors of the economy impacted by COVID-19, which has increased debt risk.

As debts reach maturity dates in the first half of next year, Yan suggested all players in the bond market work together to improve risk evaluation and warning mechanisms and stick to the bottom line of preventing systemic financial risk.

Qin Yuan, executive vice president of the company, said recent defaults by some State firms were due to a set of combined factors, which does not represent a universal problem, but has prompted the market to reevaluate its blind faith in the repayment of debt issued by State-owned enterprises.