I have recently read quite a bit about the Chinese economic situation, and there is a public debt dynamic in China that I believe deserves more attention than it normally receives.

So, let's start with the raw numbers. By the end of 2025, China's total public debt reached approximately 526.8 trillion yuan. In other words, each Chinese citizen faces a debt burden of nearly 375,000 yuan. It's a figure that makes you think.

But the interesting point is how we got here. In 2025, budget revenues were 21.6 trillion yuan, while expenditures reached 28.7 trillion. The gap is 7.14 trillion yuan, almost 33% of revenues. One in three. And since this deficit must be covered with debt, that explains the accumulation mechanism.

Here's where it gets interesting. The outstanding government bonds reached 95.44 trillion yuan. With an average interest rate around 3.5%, annual interest payments amount to about 3.34 trillion yuan. This means that nearly 16% of all tax revenues go just to pay interest. No joke.

But there is an even more critical aspect of China's public debt that is often underestimated: refinancing. In 2025, 26.3 trillion yuan of new debt was issued. Of these, as much as 12.44 trillion went simply to repay maturing principal. Adding the 3.34 trillion for interest, only 10.42 trillion remain available for new spending. More than half of the new borrowed money was absorbed by managing existing debt.

Looking at the bigger picture, Chinese private debt (families and companies) is around 370 trillion yuan. Adding everything up, total debt approaches 470 trillion. And this doesn't even count potential implicit debts that don't appear in official figures.

The pressure is evident. Every year, an increasingly larger portion of resources is simply allocated to maintaining the debt structure. It's a mechanism that works as long as revenues grow and interest rates remain manageable, but any shock could cause serious problems. Personally, it's one of the geopolitical and economic factors I monitor most closely.