How Big Is China’s Real Overall Government Debt?

Paramilitary policemen patrol in front of the People's Bank of China, the central bank of China, in Beijing in a file photo. Greg Baker/AFP/Getty Images

Commentary

Beijing has long maintained that government debt risks are overall safe and controllable. According to the official data disclosed by China’s Ministry of Finance, China’s government debt balance stood at about 96.05 trillion yuan (about $14 trillion) at the end of 2025, including roughly 41.23 trillion yuan ($6 trillion) in central government debt and 54.82 trillion yuan ($8 trillion) in local government debt.

But the official figures published by the Chinese communist regime tell only part of the story, which covers explicit, legally recognized debt. In reality, both central and local governments carry substantial contingent liabilities—implicit or hidden debt tied to guarantees or potential bailouts. Given the heavy state involvement in China’s economy, the scope and scale of such liabilities are extensive.

China’s contingent liabilities largely stem from four areas: state-owned enterprises, local government financing vehicles (LGFVs), public institutions, and pension obligations. Factoring these in would paint a very different picture of overall debt. This article outlines the main components of China’s government debt.

Central Government Contingent Liabilities

The Chinese authorities have never provided a full disclosure. While precise figures are unavailable, several categories of quasi-sovereign bonds point to sizable off-balance-sheet obligations beyond official government debt.

Policy bank bonds: Since their establishment in 1994, three policy banks—the China Development Bank, the Agricultural Development Bank of China, and the Export-Import Bank of China—have relied heavily on bond issuance for funding. These bonds, often dubbed “quasi-sovereign,” are approved by the State Council and placed with financial institutions under central bank guidance, but they are not subject to official debt ceilings. According to Beijing-based China Lianhe Credit Rating’s 2025 Bond Market Development Report, issuance of policy bank bonds reached about 6.41 trillion yuan ($937.48 billion) in 2025, up 24.76 percent year-on-year, with outstanding stock exceeding 28 trillion yuan ($4 trillion). Issuance in 2026 is expected to remain at a level similar to that of 2025.

Local Government Debt

Explicit debt: Chinese Ministry of Finance data show local government debt totaled 54.8231 trillion yuan ($8 trillion) at the end of 2025.

Contingent (hidden) debt: No comprehensive official data have been released by the Chinese authorities. However, an International Monetary Fund staff report published on Jan. 28, 2026, estimates that debt held by LGFVs—the main vehicle for local contingent liabilities—had reached 72 trillion yuan ($10.5 trillion) in 2025.

Concluding Thoughts

Even using conservative, partially disclosed figures, China’s debt burden looks far larger than official metrics suggest. To summarize, by the end of 2025, central government debt included 41.23 trillion yuan ($6 trillion) in sovereign bonds plus at least 28 trillion yuan ($4 trillion) in quasi-sovereign liabilities from policy bank bonds alone. Local governments held about 54.82 trillion yuan ($8 trillion) in explicit debt and roughly 72 trillion yuan ($10.5 trillion) in LGFV-related liabilities. The total debt amounted to 196.05 trillion yuan (about $27.23 trillion).

The actual total debt is likely higher, as it does not yet account for state-owned enterprise (non-LGFV) liabilities or unfunded pension obligations.

Finance Minister Lan Fo’an said new government borrowing would total 11.89 trillion yuan ($1.65 trillion) in 2026. This includes 6.69 trillion yuan ($0.93 trillion) in central government bonds and 5.2 trillion yuan ($0.72 trillion) in local government bonds, according to Chinese state-controlled news portal Sina.

Given limited transparency, the full scale of China’s hidden debt in 2026 remains difficult to gauge. But the trajectory is clear: Debt pressures have become entrenched, and the government faces growing difficulty working its way out.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.