China: local vs. central government borrowing and the national debt ceiling

China's recently unveiled stimulus measures have brought attention to borrowing by sub-national governments. (We invite you to revisit our dashboard on China's "special debt" market here.)

We've visualized the nation's debt load to break down borrowing by the central government and local administrations in the provinces.

Moreover, changes in central government debt can reflect the fiscal policy stance. Here, we compare the central government debt outstanding with its debt limit.

And as our first chart shows, since 2018, local governments have outpaced the national administration when it comes to adding new government debt.

At the end of Q2 2024, China's general government debt outstanding reached 74.23 trillion yuan. Some 31.62 trillion yuan of that total was central government debt, as our second chart shows, while local administrations were responsible for a larger proportion: 42.61 trillion yuan.

Our third chart compares the central government's debt to limits approved by the National People's Congress. The outstanding balance at the end of 2023 was 30.03 trillion yuan, while the limit for 2024 was 35.2 trillion yuan; that resulted in a debt balance ceiling for the entire 2024 fiscal year (the maximum permitted new added debt, calculated as the limit minus the existing debt outstanding) of 5.17 trillion yuan.

By the end of the third quarter of 2024, the central government had used up two-thirds of that debt ceiling: the net increase in outstanding debt, i.e., issuance minus repayment, had reached 3.45 trillion yuan.

We also charted the central government debt stock's maturity profile, year-to-date trends for recent calendar years, and other metrics.

By the end of the second quarter of 2024, long-term debt constituted 81.9% of the debt outstanding. Foreign-currency debt represented only about 0.7% of the total, indicating a relatively small exchange-rate risk exposure.

At the end of 2Q, China's general government leverage ratio (i.e., the debt-to-GDP ratio) had reached 57.8%.

The central and local governments' leverage ratios were 24.6% and 33.2%, respectively. That marks a rapid increase for local administrations; this metric has effectively doubled since 2011, when it surpassed its central-government equivalent. (Both ratios stood at about 16% at the time).

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