Michael Pettis is a senior fellow at the Carnegie Endowment and teaches finance at Peking University. There’s naturally a lot of attention on China’s swelling debt burden, especially after Moody’s cut the outlook on the country’s credit rating based on the “broad downside risks” posed by the borrowing binge.

That’s understandable, given that the IMF in its latest Global Debt Monitor highlighted how China’s overall debt-to-GDP ratio has increased fourfold since the 1980s. It has been particularly rapid over the past decade. Over half of the increase in the entire global economy’s debt-to-GDP ratio since 2008 is solely due to an “unparalleled” rise in China, according to the IMF.

That $47.5tn total debt pile has grown further in 2023, which might mean that China has now finally overtaken the US in debt-to-GDP terms (zoomable version of the table below):