Forget U.S. debt, China’s total borrowing is in ‘a league of its own’—much worse and deteriorating faster, analyst says

As President Donald Trump gets set to meet Chinese counterpart Xi Jinping this week, China’s technological prowess will be on display, but its state-led growth model has been slowing—and a rapidly expanding mountain of debt is a warning sign.

In fact, while the recent explosion in U.S. federal debt has raised numerous red flags, a broader measure of indebtedness across the public and private sectors shows borrowing as a share of GDP is actually down since 2010.

By contrast, China’s total debt-to-GDP ratio, excluding the financial sector, doubled in that span and has now topped 300%, according to Mark Williams, chief Asia economist at Capital Economics.

In a note late last month, he pointed out China’s debt surge has come despite weaker borrowing from households, which have been battered by the real estate market’s collapse.

But borrowing by companies as well as the central and local governments has continued to far outpace GDP growth, which has slowed in recent years, pushing the overall debt ratio higher.

Nearly 40% of outstanding debt is now owed by the public sector, including so-called local government financing........

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