New Delhi, Oct 15 (IANS) China’s debt burden has shot up in recent years, resulting in the country’s interest payments on borrowing surpassing even the high levels of the US economy, according to a media report.
Besides the Fortune report, the Financial Times, citing new Conference Board estimates, said that debt-servicing payments in China will account for 19.2 per cent of the central government’s general public budget this year, up from 12 per cent in 2014.
A separate report earlier this year from the Center for Strategic and International Studies (CSIS), which found that 19 per cent of Beijing’s spending is earmarked for interest on debt. That’s more than the 14 per cent of the US federal budget that goes to interest costs.
CSIS added that China’s spending on interest payments skyrocketed 341 per cent between 2013 and 2025, faster than any other major budget category. By comparison, total spending jumped 102 per cent in that span, with outlays on social security and employment up 207 per cent, science and technology up 137 per cent, and defence up 141 per cent.
The report by Jason Ma points out that although the US debt-interest spending also looks grim, too, and has surged about 390 per cent since 2013 to $1 trillion, the world’s two biggest economies have been diverging in key ways with implications for future growth and indebtedness.
“The US economy is accelerating, helped by the AI boom, and despite high inflation, resilient consumers have continued to spend. Unemployment is low and signals full employment, while stock markets are at or near record highs,” the report stated.
China’s GDP, on the other hand, has been decelerating and is on pace to undercut its annual target of 4.5 per cent to 5 per cent. And while export-facing sectors are growing at a fast clip, trade partners are putting up barriers; Chinese consumers remain reluctant to spend; investment is weak; the property sector is still digging out from an epic crash; and Chinese stocks have been anaemic, the report observes.
Beijing has also steered state banks to provide financing to priority industries like electric vehicles, robotics, artificial intelligence, and renewable energy.
China’s state-led growth model now looks like it’s running out of steam, and the rapidly expanding mountain of debt is a warning sign as local governments often seek to boost favoured industries with low-cost loans, the report observed.
–IANS
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