China Debt Servicing Costs Reach 19.2% of Public Budget

The Government of China is allocating 19.2% of its central government general public budget to debt-servicing costs this year. This represents a significant increase in fiscal pressure, with spending on interest payments growing by 341% between 2013 and 2025, the fastest increase of any major budget category.

China's current interest spending exceeds the 14% share of the United States federal budget dedicated to similar costs, though it remains below Japan's 25.6%. The International Monetary Fund reports that China's general government gross debt reached 107% of GDP this year and is projected to hit 124% by 2030. Further estimates from Capital Economics suggest the total debt-to-GDP ratio, excluding the financial sector, has already topped 300%.

These rising costs occur alongside decelerating GDP growth and a struggling property sector. To manage these economic headwinds, the government continues to use state banks to finance priority industries, specifically artificial intelligence and electric vehicles.