I was looking at Chinese public debt numbers and honestly I was struck by how quickly the pressure is increasing. End of 2025: 526.8 trillion yuan in total debt. It seems abstract until you divide it and realize that it’s about 375,000 yuan per citizen.

But here’s where it gets interesting. The projected 2025 budget showed revenues of 21.6 trillion yuan versus expenditures of 28.7 trillion. A deficit of 7.14 trillion yuan, roughly 5% of GDP. It’s not catastrophic on paper, but look where this money ends up.

According to data from the People's Bank of China, the circulating Chinese public debt had reached 95.44 trillion yuan. At an average interest rate of 3.5%, just paying interest amounted to 3.34 trillion yuan. This means that nearly 1 yuan out of 6 in tax revenue was absorbed by interest payments. This alone should make you think.

But there’s more. Of that 26.3 trillion yuan of new debt issued in 2025, most didn’t go toward funding new spending. About 12.44 trillion was just to refinance maturing debt, another 3.34 trillion went to interest. Less than 10 trillion remained for actual new expenditures. Practically half of the new borrowing was used to extend existing debt.

And this is just official Chinese public debt. Add private debt—households plus businesses—and we’re close to a total of 470 trillion yuan, not counting implicit liabilities that aren’t included in official statistics.

I’m not saying it will collapse tomorrow. Financial systems are more resilient than we think. But the trajectory is clear: more and more resources go toward servicing debt, less toward new initiatives. It’s the classic cycle of increasing indebtedness where economic growth must accelerate just to maintain the status quo. When that growth slows down, pressures become very real.