Recently, a study on the debt of the Chinese Communist government has attracted attention as China’s debt surpassed Europe’s for the first time last year, with growth far exceeding that of Europe and the United States.
Experts analyze that the Chinese Communist fiscal system has long “concealed” debt risks, leading to the corporatization of government functions and the financialization of corporate debt. The recent measures introduced by the Chinese Communist regime, such as “financing to support the bottom,” are seen as superficial solutions that are unlikely to address the root causes.
The amount of China’s debt has long been a mystery. According to estimates by the International Monetary Fund (IMF) and international statistical agencies, Chinese government debt reached $18.7 trillion in 2025, accounting for 96% of China’s GDP (approximately $19.5 trillion).
A recent article by Canadian research institution Visual Capitalist stated that China’s debt data exceeded the European Union’s $17.6 trillion for the first time, highlighting the rapid growth in China’s borrowing scale over the past two decades.
In 2008 during the financial crisis, China’s debt was only $1.2 trillion, while the U.S. government debt was $10.9 trillion, equivalent to the EU’s $10.7 trillion. However, by 2025, U.S. debt had surged to $38.3 trillion, growing at around 7.7% annually; the EU’s debt was $17.6 trillion, growing at 3.0% annually.
Meanwhile, China’s debt increased from $1.2 trillion at a rate of around 17% per year to reach $18.7 trillion in 2025, far surpassing the growth rates of Europe and the United States.
However, according to a budget draft report released by Xinhua News Agency on March 6, by the end of 2025, the total debt balance was around 96.05 trillion yuan (approximately $13 trillion), with national debt balance about 41.23 trillion yuan and local government debt balance about 54.82 trillion yuan.
Regarding the discrepancy of about $5 trillion between the two debt data in China, Sun Guoxiang, a professor at South China University of International Affairs and Business Department, stated to Diyi Epoch, “The two sets of numbers, taken together, do not focus on who is right or wrong, but rather show different levels of truth. Official data tells us how much the government has officially borrowed, while the other tells us how much the market believes the government might ultimately have to clean up.”
“The nearly 30 percentage points difference indicates that the real fiscal pressure in China cannot be assessed solely by looking at the visible debts within the central and local government budgets, but rather by considering quasi-fiscal activities, off-balance sheet financing, and the role of platform companies.”
“Unlike the US and Europe, China’s debt is heavily camouflaged within its system,” Sun Guoxiang said, explaining that many expenditures and investment demands originally belonged to local governments but are frequently undertaken through local financing platforms and various off-balance sheet funds. Thus, it appears that companies are borrowing money, but in reality, it is often the government spending.
“These debts may not necessarily appear on the government’s balance sheet, but the risks often circle back to the government.”
In 2026, the IMF explicitly included China’s local government financing platforms (LGFVs) and other off-balance sheet government funds in the “national debt” statistics. Sun Guoxiang believes that, “This is akin to piercing the veil; while some debts may not wear official clothes, they have already been waiting at the government’s door to report in.”