China · Financial Times · Pentagon · Fortune Technology
China’s state-led growth model now looks like it’s running out of steam
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◌ Single Source
According to the International Monetary Fund, China’s general government gross debt hit 107% of GDP this year, up from 41% in 2015 and on a path to reach 124% in 2030.
Key facts
- To be sure, U.S. debt-interest spending looks grim too and has surged about 390% since 2013 to $1 trillion, which also tops the Pentagon’s budget
- Debt-servicing payments will account for 19.2% of the central government’s general public budget this year, up from 12% in 2014, according to new Conference Board estimates cited by the Financial
- CSIS added that China’s spending on interest payments skyrocketed 341% between 2013 and 2025, faster than any other major budget category
- According to the International Monetary Fund, China’s general government gross debt hit 107% of GDP this year, up from 41% in 2015 and on a path to reach 124% in 2030
Summary
The world is flooded with debt, but while the U.S. and Europe have caused angst on global markets lately, China’s fiscal situation isn’t looking so great either. In fact, China’s debt has shot up so much in recent years that interest payments on all its borrowing are commanding a bigger share of public spending. Debt-servicing payments will account for 19.2% of the central government’s general public budget this year, up from 12% in 2014, according to new Conference Board estimates cited by the Financial Times. That tracks with a separate report earlier this year from the Center for Strategic and International Studies, which also found that 19% of Beijing’s spending is earmarked for interest on debt. CSIS added that China’s spending on interest payments skyrocketed 341% between 2013 and 2025, faster than any other major budget category.