China’s government debt has ballooned rapidly in recent years reaching roughly about $18.7 trillion in 2025 and jumping 13.6% annually, a much faster pace than seen in the US. However, the vast majority about 98% is held domestically. That means most of the money the Chinese government owes is to its own banks, companies and citizens, not to overseas investors or other countries. This is very different from the US, where about roughly 24% of public debt $8.5 trillion is held by foreign nations like Japan, China, and the UK.
When debt is internally held, a country keeps much more control. If a crisis hits, the government or central bank can intervene, changing interest rates, extending payment timelines or restructuring debt without sudden outside pressure. The currency is also less vulnerable to a sell off from foreign panic which can destabilize economies that depend on foreign debt buyers. This structure gives China flexibility that the US doesn’t always have, since the US needs to ensure ongoing confidence from foreign investors who could, in theory, decide to stop buying or sell their US Treasury holdings. In practice, this means China is less exposed to the risks of sudden capital flight or currency collapse caused by outside actors.This difference has real consequences. The US benefits from its debt being in demand globally because the dollar is the world’s reserve currency and US debt is seen as safe so it can typically borrow at very low rates. But it also means the US is partially reliant on continued trust from the global financial system, making it more exposed if investor confidence falters. In contrast, China’s strategy helps shield its economy during global turmoil and gives its policymakers direct influence. However, that insulation also means that if debt problems do arise, think property bubbles or local banking stress, China will need to solve them internally often with less immediate outside help or market discipline.Source: StockMarket.News
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