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The result is total debt that surpasses the U.S., eurozone, the U.K., and other emerging markets.

Topic: finance & marketsRegion: north americaUpdated: i2 outletsSources: 2Spectrum: MixedFiltered: US/Canada (1/2)· Clear⏱ 4 min read📡 Wire pickup
📰 Scored from 2 outletsacross 1 Left 1 Center How we score bias →
Story Summary
SITUATION
China's total debt has surpassed that of the U.S., with a debt-to-GDP ratio exceeding 300%. Analysts warn that the rapid increase in borrowing, particularly by the public sector, signals a deteriorating economic situation (per Fortune).
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Spectrum: Mixed🌍US: 1 · Other: 1
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KEY FACTS
  • China’s technological prowess will be on display, but its state-led growth model has been slowing—and a rapidly expanding mountain of debt is a warning sign.
  • By contrast, China’s total debt-to-GDP ratio, excluding the financial sector, doubled in that span and has now topped 300%, according to Mark Williams, chief Asia economist at Capital Economics.
  • But borrowing by companies as well as the central and local governments has continued to far outpace GDP growth, which has slowed in recent years, pushing the overall debt ratio higher.
  • Nearly 40% of outstanding debt is now owed by the public sector, including so-called local government financing vehicles, Williams calculated.
  • “China’s current level of indebtedness puts it in a league of its own,” Williams said.
HISTORICAL CONTEXT

The current state of China's debt, which now surpasses that of the U.S., eurozone, the U.K., and other emerging markets, is a culmination of several decades of economic policy and global financial trends. As of 2026, China's total debt-to-GDP ratio, excluding the financial sector, has exceeded 300%, a figure that places it in a unique and precarious position globally.

This situation is largely the result of China's state-led growth model, which has been characterized by aggressive borrowing and investment strategies. The roots of China's current debt situation can be traced back to the late 20th century when the country began transitioning from a centrally planned economy to a more market-oriented one.

Brief

China's debt crisis has reached alarming levels, surpassing that of the United States and raising concerns among analysts about the country's economic stability. Mark Williams, chief Asia economist at Capital Economics, highlights that China's total debt-to-GDP ratio has now exceeded 300%, a stark contrast to the U.S. situation.

This surge in debt is primarily driven by borrowing from both state-owned enterprises and local governments, which has consistently outpaced the country's GDP growth. Nearly 40% of this debt is attributed to the public sector, particularly through local government financing vehicles, which have become a significant component of China's financial landscape.

Analysts warn that this rapid accumulation of debt signals a deteriorating economic situation, as the state-led growth model that has propelled China for decades shows signs of slowing down. The implications of this debt crisis extend beyond China's borders, as it poses risks not only to its own economy but also to global financial markets.

As the situation unfolds, it remains crucial to monitor how the Chinese government addresses these mounting challenges and whether it can stabilize its economic trajectory amidst rising debt levels.

Sources
1 of 2 linked articles · Filter: US/Canada