The government debt of China is a complex and multifaceted issue. On one hand, the country's government debt-to-GDP ratio is relatively low compared to other major economies. According to the International Monetary Fund (IMF), as of 2023, the average government debt-to-GDP ratio of G7 countries is 123.4%, while China's government debt-to-GDP ratio is around 67.5%. Additionally, China's government debt is primarily in the form of government bonds, with a significant portion being held by domestic investors.
However, when looking at the overall government debt, China's total government debt of 85 trillion RMB (approximately $12.7 trillion USD) is a significant portion of its GDP. Furthermore, the country's local government debt, which amounts to 4.07 trillion RMB, is also a notable concern.
Despite the overall debt figure, China's government has been relatively cautious in its approach to achieving fiscal deficits. In fact, the country's fiscal deficit has been consistently below 3% of GDP over the years, which is significantly lower than many other major economies.
Additionally, China's local government debt has been used to fund significant infrastructure projects such as roads, bridges, and public transportation systems. These assets are expected to generate long-term revenue, which can be used to pay off the debt.
Overall, while China's government debt is significant, it is not necessarily a cause for concern. The country has a relatively low government debt-to-GDP ratio, and its debt is primarily in the form of government bonds. The country also has a history of fiscal discipline, and its local government debt has been used to fund infrastructure projects that will generate long-term revenue. Therefore, the likelihood of a debt crisis in China is relatively low.