China May Spend 19.2 Percent of Central Budget on Debt Interest

China could allocate 19.2% of its central government budget to interest payments in 2026, up from 12% in 2014, as economic growth slows and the property sector remains under pressure. Fortune reported the estimate from the Conference Board, citing figures referenced by the Financial Times.

Rising debt-servicing costs are competing with other public spending priorities as Beijing directs financing from state-owned banks toward strategic industries, including electric vehicles, robotics, artificial intelligence and renewable energy.

The Center for Strategic and International Studies (CSIS) previously estimated that interest payments accounted for about 19% of Beijing's expenditures. That share exceeds the 14% allocated to debt servicing in the US federal budget but remains below Japan's 25.6%, according to CSIS estimates.

CSIS calculations show that China's interest payment costs surged 341% between 2013 and 2025, making them the fastest-growing major category of government spending. During the same period, total government expenditure increased 102%, spending on social security and employment rose 207%, science and technology spending grew 137%, and defense expenditure increased 141%.

China's broader debt burden has also expanded substantially. According to the International Monetary Fund, gross general government debt reached 107% of gross domestic product in 2026, compared with 41% in 2015. The IMF projects that the ratio will climb to 124% by 2030.

Capital Economics estimated that China's combined public- and private-sector debt, excluding the financial sector, exceeded 300% of GDP. The firm also found that corporate debt had doubled since 2019, while corporate revenues increased only 30% over the same period.

Nearly one-third of companies whose creditors continue rolling over their loans are operating at a loss, according to Capital Economics. The figures highlight the pressure on businesses and lenders as debt expands faster than corporate revenues.

Mark Williams, chief Asia economist at Capital Economics, attributed part of the increase in borrowing to government efforts to sustain economic growth and prevent job losses. He also noted that these efforts contributed to looser lending standards at state-owned banks.