The size and structure of China's government debt

This paper analyzes the size and structure of China's government debt. In addition to explicit government debt, we consider three types of government contingent liabilities: local government debt, university debt, and state banks’ nonperforming loans. The size of each types of debt is estimated and the reasons for the emergence of each type of debt are analyzed. International comparisons are made and it is found that China's government debt is larger than many other developing countries. To insure fiscal sustainability and to leave rooms for future expansionary fiscal policies, the government should reduce contingent liabilities.

► In addition to explicit government debt, this paper considers three types of government contingent liabilities: local government debt, university debt, and state banks’ nonperforming loans.
► We estimate the size of each types of debt and analyze the reasons for the emergence of each type of debt.
► To insure fiscal sustainability and to leave rooms for future expansionary fiscal policies, the Chinese government should reduce contingent liabilities.