Comparative Analysis of China-US Debt Structures: Physical Asset Backing, Financial Risks, and Policy Implications

Abstract

The COVID-19 pandemic has led to a surge in global debt and intensified the trade-offs associated with sovereign debt accumulation. Based on data from the IMF, World Bank, IIF and other international institutions, this paper conducts a comparative analysis of the debt scale and structure between China and the United States. Unlike the U.S., where debt is primarily driven by consumption and financial activities, China’s debt is largely backed by physical assets in the secondary sector, such as infrastructure and engineering projects, which support long-term growth and returns. However, these urban investment debts have also increased fiscal pressure on local governments. To address these implicit liabilities, this paper proposes enhanced central government oversight and the strategic use of local state-owned enterprise assets. Furthermore, while monitoring the impact of global debt risks on financial and real economies, China should prioritize building a domestic circulation–oriented growth model and proactively manage its debt challenges.