National debt of China

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The national debt[note 1] (or government debt) of the People's Republic of China is the total amount of money owed by the government and all state organizations and government branches of China. As of March 2016, it stands at approximately CN¥ 28 trillion (US$ 4.3 trillion), equivalent to about 41% of GDP.


The International Monetary Fund, the Federal Reserve Bank of St. Louis[1] and other sources, such as the Article IV Consultation Reports,[2][note 2] state that, at the end of 2014, the "general government gross debt"-to-GDP ratio for China was 41.54 percent.[3] With China's 2014 GDP being US$ 10,356.508 billion,[3][4] this makes the government debt of China approximately US$ 4.3 trillion.

The foreign debt of China, by June 2015, stood at around US$ 1.68 trillion, according to data from the country's State Administration of Foreign Exchange as quoted by the State Council.[5] The figure does not include Hong Kong, Macau or that of Taiwan.[5] Chinese foreign debt denominated in the U.S. dollar was 80 percent of the total, euros 6 percent, and Japanese yen 4 percent.[5]

Issues and concerns[edit]

By the mid-2010s, many analysts have expressed concern over the overall "size" of the Chinese government debt.[6][7][8] [9] An IMF working paper, published in 2015, states that "financial sector reforms in China are progressing at an uneven pace", adding that "progress in removing implicit state guarantees has been slower."[10] This, according to the IMF paper, means that "with implicit state guarantees still in place, banks have little incentives to seek better projects and correctly price risk."[10]

A 2015 International Monetary Fund report concluded that China's public debt is relatively low "and on a stable path in all standard stress tests except for the scenario with contingent liability shocks," such as "a large-scale bank recapitalization or financial system bailout to deal, for example, with a potential rise in NPLs from deleveraging."[11]

"Shadow banking" has risen in China, posing risks to the financial system.[12][13]

Chinese authorities have dismissed analysts' worries, insisting that "the country still has room to increase government debt."[14] Finance Minister Lou Jiwei stated that China's "fiscal income is in a severe situation," yet the government "need[s] to expand the fiscal deficit, but it is hard to say how much room is appropriate."[14]

Former Fed Chairman Ben Bernanke, earlier in 2016, commented that "the...debt pile facing China [is] an 'internal' problem, given the majority of the borrowings was issued in local currency.[15] Many economists have expressed the same views, dismissing worries over the size of Chinese government debt, either in absolute terms or in proportion to the nation's GDP, as "nonsensical".[16]

Local and provincial debt[edit]

By 2015, local government entities owed a total of about 18 trillion yuan (about one-third of China's economy), mostly to state-owned banks who had made loans to the local governments "to fund risky land and property deals."[17] The Chinese central government authorized provinces to issue at least 2.6 trillion yuan ($419 billion) in bonds in 2015 in order to stabilize the financial system.[17] However, demand for provincial bonds from the private market was weak due to inadequate yields, and in May 2015, the central government directed state-owned lenders to buy the local bonds, creating a debt swap akin to a bailout.[17]

See also[edit]


  1. ^ The term "national debt" typically refers to direct liabilities of the Government. There are several different concepts of debt that are at various times used to refer to the national debt: "Public debt" is defined as public debt securities issued by the Government. "Debt held by the public" measures the cumulative amount outstanding that the government has borrowed to finance deficits. See: FAQ, U.S. Department of the Treasury
  2. ^ An "Article IV consultation" is a "regular, usually annual, comprehensive discussion" between IMF staff and representatives of individual member-countries concerning the member's economic and financial policies, conducted on the basis of Article IV of the IMF Articles of Agreement. See: IMF Glossary


  1. ^ "General government gross debt for China", Federal Reserve Bank of St. Louis
  2. ^ "People's Republic of China 2015 Article IV Consultation - Press Release; Staff Report; and Statement by the Executive Director for the PRC" IMF Country Report No. 15/234
  3. ^ a b World Economic Outlook Database, October 2015, IMF
  4. ^ China, World Bank
  5. ^ a b c "China's external debt stands at $1.68 trillion in June", State Council announcement, 2 October 2015
  6. ^ "The great hole of China", The Economist, 18 October 2014
  7. ^ "China's Total Debt Load Now Over 280% Of GDP" by Kenneth Rapoza, Forbes, 9 May 2015
  8. ^ "China's Debt-to-GDP Ratio Just Climbed to a Record High" by Ye Xie, Bloomberg 15 July 2015
  9. ^ "How will China tackle its debt dilemma?" by Adair Turner, Institute for New Economic Thinking, World Economic Forum website, 3 December 2015
  10. ^ a b "Financial Distortions in China: A General Equilibrium Approach" by Diego Anzoategui, Mali Chivakul, and Wojciech Maliszewski, IMF, 2015
  11. ^ IMF Country Report No. 15/234, People's Republic of China: Staff Report for the 2015 Article IV Consultation (July 7, 2015).
  12. ^ Noah Smith, Be Scared of China's Debt, Not Its Stocks, Bloomberg View (7 January 2016).
  13. ^ Chinese Banks Look to Shadow Banking for Growth: Risks increase as third-quarter earnings show banks pushing deeper into gray markets, Wall Street Journal (October 30, 2015), p. 76.
  14. ^ a b "China's fiscal income to slow but room for more government debt - Finance Minister" by Xiaoyi Shao and Lisa Twaronite, Reuters, 7 March 2016
  15. ^ "Bernanke downplays China impact on world economy" by Joyce Ho, Nikkei Asian Review, 19 January 2016
  16. ^ "...Most people think of China's growth coming from its burgeoning export sector. But it has a very strong domestic economy and a large public spending program – its called ‘nation building’. ... [T]here is no discussion [in China] about the country drowning in debt and all of that nonsense. [The Chinese] know full well that they are sovereign in their own currency and can deficit spend to further their sense of public purpose." : From "The government really is instrumental in creating growth" by Bill Mitchell, 20 January 2016
  17. ^ a b c Shen Hong, China's Plan for Local Debt Amounts to a Bailout, Wall Street Journal (June 23, 2015).

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