Does China have debt?
China's debt-to-GDP ratio climbed to a new record high in 2023 despite the slow pace of borrowing, reflecting the economy's weakening growth, a new report from a state-backed think tank shows.
In 2023, aggregate local government debt had risen to 92 trillion yuan ($12.58 trillion) and the central government of People's Republic of China ordered its banks to roll over debts in a debt-restructuring. China's gross external debt in 2023 was $2.38 trillion.
Corporate debt adds another 123 per cent of GDP worth of liabilities, a large chunk of which is owed by state-owned enterprises (SOEs) [2]. In addition, household debt - mostly mortgages - is 61 per cent of GDP. Altogether, China's gross national debt is over 300 percent of GDP.
- Japan. Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP. ...
- United States. ...
- China. ...
- Russia.
China was expected to experience a rip-roaring recovery after it lifted strict COVID-19 restrictions. But almost a year after the measures ended, the Chinese economy seems to be stumbling. Prices have fallen. Exports and imports have plummeted.
Debt as a share of GDP has risen to about the same level as in the United States, while in dollar terms China's total debt ($47.5 trillion) is still markedly below that of the United States (close to $70 trillion). As for non-financial corporate debt, China's 28 percent share is the largest in the world.
China is one of the United States's largest creditors, owning about $859.4 billion in U.S. debt. 1 However, it does not own the most U.S. debt of any foreign country. Nations borrowing from each other may be as old as the concept of money.
1) Switzerland
It is no surprise to see Switzerland on this list. Switzerland is a country that, in practically all economic and social metrics, is an example to follow. With a population of almost 9 million people, Switzerland has no natural resources of its own, no access to the sea, and virtually no public debt.
Holders of U.S. Debt
Were China to suddenly unload its reserve holdings, its currency's exchange rate would rise, making Chinese exports more expensive in foreign markets. As such, China's holdings of American debt do not provide China with undue economic influence over the United States.
Most of this debt came from building infrastructure, much of which is unlikely to generate revenues sufficient to pay off the obligations. With China's trend growth rate notably lower now than it was, it leaves a burden over the long haul.
What country has the best economy?
China has little overseas debt, and a high national savings rate. In addition, most of the debt is state owned – state-controlled banks loaned funds to state-controlled firms – giving the government the ability to manage the situation.
"The likelihood of the prediction that China's GDP will one day overtake that of the U.S. is declining," Eswar Prasad, a professor at Cornell University and a former International Monetary Fund official in charge of China, told Nikkei in a recent interview.
China's crushing debt levels, ageing population and an ongoing property crisis means it may never surpass the US to become the world's largest economy, according to a leading investment bank.
| Statistics | |
|---|---|
| GDP | $18.560 trillion (nominal; 2024 est.) $35.032 trillion (PPP; 2024 est.) |
| GDP rank | 2nd (nominal; 2023) 1st (PPP; 2023) |
| GDP growth | 5.2% (2023) 4.6% (2024f) |
| GDP per capita | $13,155 (nominal; 2024) $24,839 (PPP; 2024) |
Russia owns less than 2.5 $Billion in US Treasury notes, a trifling amount. Russia does not “own” US debt. It just owns bonds that are not callable and it takes its interest payments as agreed. Russia has sold almost 100 $Billion in US bonds to reduce its vulnerability to US sanctions.
Public debt in Russia averaged 15.4% of GDP in the decade to 2022, below the average of 32.5% of GDP for Eastern Europe. Public debt in Russia was 18.9% of GDP in 2022.
| Country/territory | US foreign-owned debt (January 2023) |
|---|---|
| Japan | $1,104,400,000,000 |
| China | $859,400,000,000 |
| United Kingdom | $668,300,000,000 |
| Belgium | $331,100,000,000 |
As a result, if the United States and other countries were to stop trading with China, it would disrupt global supply chains and cause economic disruptions in many countries.
Many people believe that much of the U.S. national debt is owed to foreign countries like China and Japan, but the truth is that most of it is owed to Social Security and pension funds right here in the U.S. This means that U.S. citizens own most of the national debt.
How much is China worth?
| Country | Economy |
|---|---|
| United States | $25.347 trillion |
| China | $19.91 trillion |
| Japan | $5.396 trillion |
| Germany | $4.55 trillion |
Years of elevated budget deficits, exacerbated by massive federal spending during the COVID-19 pandemic, have taken the debt to historic levels: totaling more than $26 trillion in 2023, U.S. federal government debt is now at its highest percentage of gross domestic product (GDP) since World War II.
The dollar is a global reserve currency and U.S. bonds are seen as one of the most stable investments on the planet. So if the U.S. cannot pay its creditors, interest rates on U.S. debt would go up, creating a cascade of higher interest rates. So mortgage rates, credit card rates, car loan rates.
Just about every country has debt: governments take loans to pay for new roads and hospitals, to keep economies ticking over when recessions hit or tax revenues fall. Sometimes they borrow from countries, other times banks, or maybe asset managers—companies like those investing your pension dollars.
Who does the United States owe the most debt to? As of July 2020, Japan overtook China and became the largest foreign debt collector for the U.S. The United States currently owes Japan about $1.2 trillion according to the U.S. Treasury report.
