Macroscope | Global debt crisis goes well beyond China’s property sector woes

The crisis in China’s property sector has been in the spotlight in the past year, but the rise in global debt levels should not escape the world’s attention

Investors and analysts have been more focused on inflation, but with price rises abating, debt is likely to be the leading concern once again

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A woman rides a scooter past a construction site for residential buildings by indebted Chinese developer Country Garden in Tianjin on August 18. Photo: Reuters

Anthony Rowley

Published: 4:30pm, 2 Dec 2023Updated: 9:49am, 3 Dec 2023

Corrected [9:46am, 3 Dec, 2023]

[9:46am, 3 Dec, 2023]
An earlier version of this article incorrectly stated that Steve Hanke is affiliated with Columbia University.

The widespread debt problems in China’s property sector have received a great of publicity in the past year, and there is no question they are severe. However, the expansion of global debt during this time – arguably a matter of much greater consequence – appears to have been all but ignored.

Soaring debt is far from being solely a Chinese problem. Debt is approaching crisis levels in some sectors of the US, Japanese, British and other economies, but this does not seem to enter the headlines nearly as often.

According to the Institute of International Finance’s (IIF) latest Global Debt Monitor report, global debt reached a “staggering” US$307 trillion in the third quarter this year. Large increases in debt were seen in both mature and emerging economies and across a spectrum of companies, households and governments.

“Staggering” is the kind of term those attempting to describe the debt problems in China would use. It is strong language coming from a sober institution such as the IIF, but the description is warranted nevertheless.

The fact that global debt has reached such proportions is unlikely to set media or other commentators alight with sudden interest. It will almost certainly take another full-blown international debt crisis to do that.

It is not only absolute levels of debt and the fact that global debt currently exceeds three times global annual GDP that should be exciting interest. Such figures are not so alarming in themselves; it is the context that matters.

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.css-1m2rp1p{color:#34b8b5;}Macroscope | Global debt crisis goes well beyond China’s property sector woes

Macroscope | Global debt crisis goes well beyond China’s property sector woes