China’s National Debt Grows 3x Faster Than the U.S. In 12 Months

China’s economy grew by leaps and bounds post-2001 after the country steered towards manufacturing products to cater to global demand. The Chinese economy experienced phenomenal growth over the years reaching a GDP of $19.37 trillion in 2023. China is only second to the United States a $26.85 trillion economy and is now looking to overtake the U.S. Nonetheless, while the growth is remarkable, China’s financial rise to power has now come at a cost.

The Chinese national debt is steadily increasing, giving room to concerns about its ability to sustain the growing economy. The national debt of China now amounts to $14.34 trillion and ranks second globally only below the U.S. The United States has the highest national debt globally amounting to $31.68 trillion.

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In FY 2022-23, the U.S. national debt grew by $1.3 trillion or 4.28%. However, China’s national debt grew three times that of the U.S. in the last 12 months raising concerns of upcoming financial instability.

The national debt of China increased by $3.81 trillion or 36.18% year-on-year (YoY) compared to the $10.53 trillion recorded in FY 2021-22. Therefore, China’s national debt is increasing more sharply than the United States and could move further ahead in FY 2023-24. The chart below illustrated how China and the United States national debt grew rapidly in the last 12 months.

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Why is China’s National Debt Growing Faster than the U.S.?


China’s increasing national debt comes from a combination of factors including government spending on development projects and slowing economic growth. President Xi Jinping’s administration injected billions of dollars worth of credit into government-owned enterprises as a response to the global financial crisis.

Subsequently, the Covid-19-induced lockdowns added an extra burden on the Chinese economy forcing financial establishments to make it easier for companies to secure loans and stay afloat.

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The overall combination made China’s debt increase relatively equal to its entire GDP. The growing trend is expected to continue and its growth and rise to power have come at a price.