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Main article: Economy of China
2024: $1.4 trillion debt refinancing program for local governments
In November 2024, China announced a program to refinance debts of regional governments in the amount of 10 trillion yuan ($1.4 trillion).
2023
Public debt - 79% of GDP or $13.5 trillion
China's public debt is rapidly approaching 98.4 trillion yuan or 13.5 trillion dollars, which is the maximum for the entire time 79.4% of GDP according to BIS data for the 2nd quarter of 2023.
Unlike the United States, where statistics on public debt are available in real time, everything is more complicated with China. Data can be mutually exclusive.
For example, according to BIS, the debt of the central government is about $4.9 trillion, and according to SAFE, the debt of the central government is $7.3 trillion due to accounting for $2.4 trillion of direct state guarantees for debts of state-owned enterprises in China, which amount to $4.8 trillion according to BIS estimates and $2.2 trillion according to SAFE estimates (depending on how to count).
The total estimate of public debt converges to $13.5 trillion.
The growth rate of the Chinese public debt: 28% in 2008, 36% in 2013, 53% in 2017, 50% in 2019 and now 79.4% of GDP.
China's real public debt may be significantly larger due to quasi-state companies and shadow off-balance sheet operations, Spydell Finance wrote.
Discrepancies in overall figures may arise from the inclusion of various forms of debt, such as off-balance sheet debt and debts of state-owned enterprises and publicly owned banks, which may not be directly accounted for in central and local authorities. The combination of these debts contributes to China's overall public debt figure.
China's sustainability lies in a debt structure almost entirely directed at domestic investors, which reduces dependence on cross-border capital flow and international financial, economic and political conditions.
Plus, the specifics of the issue of China's public debt are similar to the Japanese one, where a pool of policy-making structures in the form of quasi-state banks, investment funds, pension and insurance funds almost forcibly absorb free liquidity in national government bonds.
By itself, the fact of the exponential expansion of China's public debt clearly indicates the replacement of a private state initiative in an attempt to maintain economic growth - also done by the United States, Europe and other developed countries in 2008-2012.
Most regions of China have debt of more than 120% of GDP
The debt of local authorities does not cause contradictions and makes up the bulk of China's public debt - $5.1 trillion or about 34% of the total public debt.
The main debt holders of Chinese local authorities are:
- Chinese banks: about 80%
- Non-banking financial institutions in China: About 10%
- Non-residents: About 10%
In October 2024, China is considering allowing local authorities to issue bonds totaling up to 6 trillion yuan by 2027, which will help solve the problem of hidden debts.
Non-residents hold about 25% of China's public debt
As of 2q23, non-residents collectively hold about 25% of the Chinese public debt. In absolute terms, this is about $3.3 trillion.
The main holders of Chinese public debt among non-residents are:
- International financial institutions such as BIS, IMF, World Bank and Asia Investment Bank: about 20%
- Foreign central banks: About 15%
- Private investors such as investment, insurance and pension funds: about 65%
Among international financial institutions, the largest holder of the Chinese public debt is the Bank for International Settlements (BIS), which owns 1.4 trillion yuan (about $230 billion).
Among institutional investors, the largest holder is the Norwegian Pension Fund, which owns 1.3 trillion yuan (about $220 billion).
Among private investors, the largest holder is the Bridgewater Associates hedge fund, which owns 420 billion yuan (about $70 billion).
The main holders of Chinese debt (Spidell Finance estimates are very approximate):
- Chinese Central Bank (CBK): About 30%
- Chinese banks: About 25%
- Non-banking financial institutions in China: About 20%
- Non-residents: About 25%
It is impossible to find out the exact structure of debt holders of Chinese state corporations, but the main holders are Chinese banks and the state.
The structure of debt on loans and bonds is difficult to imagine due to a significant discrepancy of information.
About 65% of the national debt is nominated in yuan
As for currency exposure, yuan debt is about 65% for all debt, where the central government is 75%, local authorities are 70%, and state-owned companies are 60%.
The high share of foreign currency debt seems dubious, but many international Chinese companies are included here, as:
- China National Petroleum Corporation (CNPC),
- China National Grid Corporation (SGCC),
- China Railway Corporation (CRCC),
- China State Shipping Corporation (COSCO),
- Chinese Chemical Industry (Sinochem) and
- Chinese State Aluminum Corporation (Chalco).
2018: State debt $7.1 thousand per capita
2017: Public debt 47% of GDP
2010: National debt 19% of GDP
See also
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