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

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.