When it comes to the world's largest debtor country, the first thing that comes to mind is the United States. Originally, they liked to use bonds to build the economy, and after the epidemic, they continued to print money, which led to global inflation. These bottomless financial instruments have made the United States the world's largest debtor. Our country has a lot of U.S. bonds, and the economy should be in good shape, but the reality is that our country is also quite indebted.
Data show that China's debt exceeded 650 trillion yuan last year, while the annual GDP was only 120 trillion yuan. This means that the gap between income and expenditure is huge, and the debt is actually 5 times the income!How did such a huge debt come about?How should it be solved in the future?
Debt composition
According to the released data, China's main debt comes mainly from enterprises and **, followed by financial institutions and ordinary residents.
The largest part is corporate debt, accounting for more than 60% of the main debt, about 400 trillion yuan.
The second is ** investment, accounting for more than 25%, which includes a part of urban investment bonds.
The remaining about 15 per cent of the debt comes from financial institutions and residents. In the absence of a comprehensive personal bankruptcy regime, mishandling of personal debts can affect bank or business assets.
Overall, most of China's debt comes from corporations and **. This shows that debt is mainly in the development of various industries, and proper handling will help the overall economy improve.
Where did the money go?
The liabilities of the state and individuals are very different. Our personal debts are usually used for consumption, such as car loans, housing loans, etc. However, the use of national debt is more complex, and the structure of debt varies from country to country, depending on the situation, ideology and cultural differences.
The state's capital expenditure is mainly divided into reserves, investment and consumption expenditure. As an economy, it needs budget analysis to maintain a balance of expenditures and promote the stable development of various industries.
First of all, China's debt expenditure is mainly used for investment, of which infrastructure investment accounts for a large proportion, with an average annual investment rate of more than 40%, much higher than the level of Europe and the United States. Domestic infrastructure such as roads, railways, ports, airports, etc. have developed rapidly, and the construction and improvement of industrial systems have also been emphasized.
With the intensification of globalization, scientific and technological innovation has become the core of the game. China's investment in chips, 5G, aerospace, new energy and other fields has increased year by year.
Second, China's debt expenditure includes consumption, of which ** and household consumption account for more than 50%. *Consumption mainly involves military spending, social welfare, pension and public services, improving people's happiness and national defense security.
Finally, there is the reserve fund, which is mainly used to maintain foreign exchange reserves. The stability of foreign exchange reserves has a direct impact on the smooth operation of the domestic economy and social order.
How do I pay off my debts?
There are two ways to deal with the country's high debt: one is to reduce the debt burden by issuing a large number of new currencies, which leads to inflation and currency depreciation.
The other is to strengthen the state's supervision over enterprises and improve the bankruptcy law. At present, there are loopholes in China's enterprise bankruptcy law, which leads to the bankruptcy of enterprises due to their inability to repay bank loans, and the unpaid high debts become bad debts. The law should be improved to address this problem.
While the first method can quickly resolve debt issues, there are also potential risks. This approach is essentially an overdraft of the country's future economy to solve the current debt crisis, which could lead to long-term economic problems that will have to be paid for for decades to come.
Finally
Although China's debt problem is not as serious as that of the United States, it has had a great impact on the lives of ordinary people. Local debt has caused a series of problems, such as the elimination of non-staff personnel and the indiscriminate collection of fees, which shows that we need high-quality development. Therefore, we must reject the reckless and blind borrowing of debt, and instead pursue a more robust development path. Debt