Recently, the Minister of Finance of the Chinese Communist Party (CCP), Lan Fo’an, publicly disclosed that by the end of 2024, the total amount of government debt had reached nearly one hundred trillion yuan. Experts, based on official data, pointed out that the CCP’s financial system is on the brink of collapse, with the central government “relying on borrowing for every penny of expenditure,” and overall economic risks are continuing to escalate.
During a press conference held by the CCP on September 12th, Minister of Finance Lan Fo’an stated that by the end of 2024, the off-balance-sheet debt of local governments amounted to 10.5 trillion yuan. This is the latest disclosed balance of off-balance-sheet debt of local governments and is a result of the CCP’s new debt-for-bond policy of 1.2 trillion yuan introduced last year.
Off-balance-sheet debt refers to debts borrowed by local governments beyond the legal debt ceiling through direct means or commitments to repay with fiscal funds, as well as providing illegal guarantees.
Lan Fo’an mentioned during the meeting that as of August 2025, local governments had issued 4 trillion yuan of refinancing special bonds, with an average interest cost reduction of over 2.5 percentage points.
Since 2022, special bonds have become the main financing mechanism for infrastructure projects. In 2024, the CCP Ministry of Finance announced a 1 trillion yuan debt swap plan, intending to use special bonds over the next five years to replace the off-balance-sheet debts of local government financing platforms (urban investment enterprises).
However, the international rating agency Fitch Ratings warned in April of this year that the interest expenses on special bonds of local CCP governments as a proportion of total local government government fund expenditures have risen significantly from 2.9% in 2019 to 7.6% in 2023 and may reach 10% by 2025.
It is worth noting that Lan Fo’an also revealed that by the end of 2024, the total government debt of the CCP reached 92.6 trillion yuan, including national debts of 34.6 trillion yuan and statutory debts of 47.5 trillion yuan by local governments.
Addressing the data released by Lan Fo’an, Chinese affairs expert Zhang Tianliang stated on the program “Tianliang Political Commentary” that this conceals deeper structural issues.
He analyzed that based on the national fiscal revenue situation in 2024: the national fiscal revenue was 23.4 trillion yuan, with central fiscal revenue of 10.1 trillion yuan and local fiscal revenue of 13.3 trillion yuan. The main source of central government revenue comes from taxes turned over by local governments, which are then redistributed to impoverished areas through fiscal transfers. In 2024, the total amount of central fiscal transfers to local governments reached 10.2 trillion yuan, slightly more than the central fiscal revenue of 10.1 trillion yuan. This means that even after transferring all revenue to local governments, the central government still needs to subsidize approximately 100 billion yuan, leading to a severe shortage of operational funds for the central government.
He emphasized that the central government annually needs to allocate between 4.5 trillion to 5 trillion yuan for defense, education, foreign affairs, the “Belt and Road” initiative, the September 3 military parade, and government operations. However, due to all revenues being used for transfers, these expenses are entirely reliant on borrowing to maintain.
“Every penny spent by the central government is borrowed,” Zhang Tianliang described this situation as “extremely frightening.” He stated that the Chinese economy is facing severe difficulties, already in a state of “dying the last gasp,” and official data reveals that the CCP’s financial system is on the verge of collapse as admitted by Minister of Finance Lan Fo’an.
Regarding the economic direction of the CCP, Zhang Tianliang warned that as the Chinese economy continues to decline, the real estate industry remains in a slump, and industries such as new energy vehicles and solar panels face global resistance, making it difficult for central fiscal revenue to sustain its current level. If continued reliance on borrowing persists, the government will face risks of debt default, potentially leading to inflation and currency devaluation through money printing, or further tax increases exacerbating the burden on the people, ultimately causing further contraction of economic activities.
He believes that this fiscal dilemma has left the CCP leader Xi Jinping “no way out,” and the Chinese economy is accelerating its decline.