Part 2/7:
Current figures indicate that China's debt-to-GDP ratio has reached approximately 297%, an alarming figure compared to the United States, which boasts a ratio around 25%. While the US has been able to manage and gradually reduce its debt levels in recent years, China’s debt has been escalating rapidly. This discrepancy highlights a crucial difference in how debt is managed in these two prominent economies.
The Chinese economy reveals a convoluted structure wherein local governments pursue ambitious growth targets set by the central government, often resorting to significant amounts of debt to finance vast infrastructure projects. These initiatives are intended to impress the authorities in Beijing, thus fostering the perception of progress and growth.