China External Debt as a % of GDP Highlights in 2020
China’s external debt as a % of GDP hit 15.2% in 2020, an increase of 7.5% over the previous year. Between 2010 to 2020, China’s external debt as a % of GDP increased by 24.7%.
General government debt stood at 66.82% of GDP in 2020 due to COVID-19. The unprecedented increase in fiscal spending to combat COVID-19 in 2020 put pressure on the government’s finances. According to the IMF, general government gross debt increased from 52.63% of China’s GDP in 2019 to 61.7% of its GDP in 2020. The primary source of China’s high debt is the corporate sector. The government is continuing to expand its fiscal expenditure to help the economy recover from the economic crisis. The IMF forecasts 66.53% gross debt for China in 2021. Concerns have been raised about the quality and quantity of local government debt in China. Local government debt has increased due to the mismatch between the revenue and expenditure of local governments. High levels of local government debt are expected to place a significant burden on local government finances.
Outlook on Global Economy
Real GDP is measured using inflation-adjusted base year prices. Real GDP changes are a measure of economic growth and show whether there has been an increase or decrease in the volume of economic activity.
According to real GDP, the world's top five economies are the United States, China, Japan, Germany, and India. After the US, China had the largest real GDP in 2021 with a value of $12.7 trillion in 2021. With a $6 trillion real GDP during the same period, Japan came in third place globally. Germany and India are the other two largest leading economies, with real GDPs of $3.8 trillion and $2.9 trillion, respectively.
Factors Affecting the Global Economy
A rise in COVID-19 cases:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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