China’s National Debt Clock: What’s the Current Figure (and What’s Included)?

Obligations that are not represented by bonds or bills, such as pension obligations or guarantees to the banking sector or private companies are not included in the national debt figure.

China does not include the debts of state-owned enterprises into its accounts.

These businesses, which are controlled either by the central government or by the local government represent a very large sector of the economy and banks lend to them in preference to private sector businesses.

This credit availability makes state-owned enterprises potential cash cows for unscrupulous managers.

What’s Included In China’s National Debt Figures?

The table below explains what is included in the national debt figure and what isn’t:

Who Manages China’s National Debt?

There are two types of public debt instruments in China:

• Central government bonds
• Municipal bonds

The Chinese central government’s Ministry of Finance is responsible for raising funds for the national government and also supervising debt instruments issued by local governments.

Overall economic activity and public finances are governed by a separate committee, called the Central Economic and Financial Commission.

The Ministry of Finance and even the Minister of Finance is answerable to this committee, which is steered by the President of the Republic, Xi Jinping.

How Are Policies Implemented?

The Ministry of Finance implements policy with respect to local government debt through a series of warnings and encouragements.

The central government also controls the financial activities of local governments by issuing guidance to state-owned banks on the loan policy they should undertake with respect to local government.

What Is China’s Local Government Debt?

China’s provinces and local governments enjoy a high degree of autonomy and this extends to their financing. Local government has the right to raise its own funds through the direct issuance of bonds.

Local government debt first became a national issue in 2015 when the country experienced a banking crisis.

The central government directed local governments to bail out the banks in their areas by issuing municipal bonds to raise sufficient funds.

This issue was largely unsold because the municipal bonds offered a lower return than other investment options in China.

The central government then directed state-owned banks to buy the bonds, thus cycling new capital into privately-owned banks through the accounts of the local government.

Chinese National Debt Vs. Local Government Debt

The IMF estimated China’s national debt to be 51.2% of GDP by the end of 2017. However, most of that debt is owed by local government.

A 2018 investigation by BNP’s Investors’ Corner estimated that China’s local government debt represented a figure over 50% of the country’s GDP.

Other reports by domestic news outlets within China put the 2018 figure for local government debt at 16.61 trillion Yuan in April of that year.

The country’s central government declared a cap on local borrowing of 20.99 trillion Yuan for 2018.

The figure of 16.61 trillion Yuan works out to $2,432 billion, 20.99 trillion Yuan is equivalent to $3,075 billion. As the country’s estimated GDP stood at $14,092 billion at the end of 2017, the government’s projections for local government debt amount to 21.82% of GDP.

Is There Hidden Public Debt In China?

The central government is aware that it is subject to international scrutiny.

However, the opportunities for creative debt management seem to be greater in local government.

As evidenced by the national government’s bank bailout strategy in 2015 shows, China’s officials seem to like to use a combination of local government financing and the lending policies of state-owned banks to channel a lot of central government actions through the accounts of local government.

An estimate by China’s National Institute of Finance and Development, reported by the South China Morning News in April 2018, revealed hidden debts owed by the country’s local governments.

Other Sources Of Public

This identified 30 trillion Yuan of debts raised through the derivative markets and other “shadow banking” methods.

The Institute also noted a further total of 10 trillion Yuan in obligations that were obscured by lease agreements and other “public-private partnership” techniques.

This amounts to an extra 40 trillion Yuan ($5,857 billion) of public debt that is not reported in the country’s national debt figure.

That is another 41.6% of GDP, bringing the true debt to GDP ratio for China’s national debt up to 92.8%.

Debts Of State-Owned Enterprises

As the finances of China’s state-owned enterprises have never been investigated, it is possible that similar creative fundraising methods have also been practiced by those institutions.

The official overall debt-to-asset ratio of government-owned businesses stood at roughly 60%, according to a Financial Times report in June 2018.

However, at the beginning of 2018, the central government embarked on a policy of forcing state-owned businesses to deleverage.

Compliance with that directive may well have forced those businesses to turn to the shadow banking system to hide their debts in the same manner as local government.

How Does The Chinese Government Raise Loans?

The Ministry of Finance does not advertise its schedule of bond sales, nor does it disclose any other securities that it might use to cover cash flow issues or raise short-term financing.

All government debt is issued in Yuan, which is not convertible to foreign currencies and so there is no interest in these bonds for foreign investors.

Similarly, municipal bonds are written in Yuan and not intended for purchase by overseas investors.

Central government bonds are not intended for sale to the general public but are distributed behind closed doors to the major Chinese banks, which are all state-owned.

What Are Wealth Management Instruments?

Municipal bonds are made available to the retail market. However, these are distributed through the state owned banks, who make a bigger effort to attract public deposits through “wealth management instruments.”

These schemes are direct lending facilities that enable less attractive private businesses to borrow money at higher than the state-dictated interest rate.

The wealth management instruments provide the funds for banks to lend out to these private borrowers and pay higher interest rates to savers than municipal bonds offer.

Therefore, most municipal bonds end up on the balance sheets of the state-owned banks.

Summary of Chinese Public Debt Types

The majority of Chinese public debt is not officially owed by the central government.

However, all of that debt is ultimately guaranteed by the national government of China and should rightfully be recorded in its entirety as the Chinese national debt. The location of those debts are ranked below:

1. Local government debt to shadow banking — 31.1% of GDP
2. Local government debt as municipal bonds — 21.82% of GDP
3. Central government debt issued as bonds — 14.02% of GDP
4. Local government public-private initiative — 10.39% of GDP

So, an investigation of China’s national debt requires more research at the local government level that in the national government accounts.

These figures for total public debt also do not touch upon the undisclosed debts of state-owned banks and state-owned enterprises, which represent a large sector of the Chinese economy.

What facts should you know about China’s national debt?

• You could wrap $1 bills around the Earth 38,335 times with the debt amount.


• If you lay $1 bills on top of each other they would make a pile 1,075,498 km, or 668,283 miles high.


• That's equivalent to 2.80 trips to the Moon.

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Further Reading

If you’re interested in debt clocks for other countries, see our pages on:

• Australia’s Debt Clock
• Brazil’s Debt Clock
• Denmark’s Debt Clock
• France’s Debt Clock
• Singapore’s Debt Clock

More, we have economic overviews for dozens of countries where you can learn about GDP statistics, top imports, and top exports.