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China economy
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Explainer | China debt: how big is it and who owns it?

  • The Institute of International Finance (IIF) estimated that China’s total domestic debt rose to 335 per cent of gross domestic product (GDP) in 2020
  • Broadly speaking, China’s debt can be divided into domestic debt and foreign debt

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The Institute of International Finance (IFF) estimated that China’s total domestic debt would likely to hit 335 per cent of gross domestic product (GDP) in the second quarter of 2020, up from 318 per cent in the first quarter – the largest quarterly increase on record. Photo: AP
Amanda Lee
A new version of this story has been published. Click here for the latest data on China's debt. 

What is the nature of China’s debt? 

Broadly speaking, China’s debt can be divided into domestic debt and foreign debt.

China’s domestic debt, denominated in yuan, consists of three components: corporate, household and government debt. Corporate debt includes borrowings by private sector and state-owned companies, while China’s public debt is a combination of national and local government debt. Household debt, meanwhile, is the combined debt of all people in a household, including consumer debt and mortgage loans.

China’s foreign debt in currencies other than the yuan includes private sector firms’ borrowing from foreign banks, trade-related credit to Chinese firms from foreign trading partners and debt securities issued by Chinese state-owned and private sector firms to foreign investors.

What about the debt the world owes China?

Almost all of this lending is official, coming from the government and state-controlled companies. Over the years, China has been actively lending to emerging economies such as those in Africa. China is also a large holder of US Treasuries, effectively funding federal budget deficits in the United States. However, many of the borrowings in developing countries are between governments, and China often does not disclose details or terms of the loans.

China has also been expanding its overseas projects financed by state-backed loans under the Belt and Road Initiative, an ambitious infrastructure investment plan to build rail, road, sea and other routes stretching from China to Asia, Africa and Europe.

According to a report by Institute of International Finance report published in January 2021, China's outstanding debt claims on the rest of the world rose from some US$1.6 trillion in 2006 to over US$5.6 trillion by mid-2020, making China one of the biggest creditors to low income countries. 

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