China urgently needs a plan to address a build-up of corporatedebt that is manageable but with a window to address it “closingquickly,” according to an International Monetary Fund workingpaper.

The rapid increase of debt since the global financial crisis hasleft China with a credit gap comparable with those experiencedpreviously by countries such as Thailand, Spain and Japan thatsubsequently experienced “painful deleveraging,” said the paper byIMF staffers. China's risks appear high but are manageable if theproblem is addressed promptly, it said.

The working paper's warning adds to a drumbeat of concern over asurge in corporate debt that coincides with dwindling economicreturns as the nation gets less growth for each buck of credit.China's government released guidelines last week for reducing debtand said it won't bear final responsibility for borrowing bycompanies.

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