China's debt interest burden surges to record share of government spending

Recent data indicate that interest on sovereign debt now accounts for 19.2% of China's central government budget, a jump from 12% in 2014 and the fastest-growing budget line since 2013. The surge, driven by a 341% rise in debt-service outlays between 2013 and 2025, exceeds growth in social security, science, defense and other major categories. While the United States spends about 14% of its federal budget on interest and Japan 25.6%, China's rising debt ratio—107% of GDP this year, projected to reach 124% by 2030—raises concerns about fiscal sustainability.

The IMF and private analysts note that weak consumer demand, a sluggish property market and risky lending to questionable borrowers are compounding the problem. As local governments rely on cheap loans to support priority sectors, the mounting debt is increasingly seen as a drag on economic growth.