Several days ago, just as America’s national debt topped $40 trillion for the first time, China’s official propaganda outlets took the opportunity to mock the United States over this ominous milestone.
Xinhua is the Chinese government’s official news agency, and they published a scathing commentary comparing the US national debt to Frankenstein and his monster. They noted both were “destroyed by the forces they had set in motion,” and that America “risks a similar end.”
Another Xinhua social media account mocked the US government for borrowing new debt to pay back old debt, joking, “sounds like a perfect plan.”
And a different Xinhua piece warned that US Treasuries were transforming from a rock-solid “risk-free” safe haven asset into a source of volatility.
Xinhua’s comments are not wrong. $40 trillion an insane amount of debt, and if you include state and local debt across the United States— New York, California, Chicago, etc., the total gross debt grows to $44 trillion.
The worst part is that few politicians are serious about cutting the debt, or even slowing down the borrowing. Congress can’t even cut hundreds of billions of dollars’ worth of obvious fraud.
But the criticism is pretty rich coming from the Chinese Communist Party.
America’s federal debt is roughly 125% of GDP. Even including state and local debt it’s 135% of GDP.
But China’s is 107% of GDP— so it’s not like the CCP is some paragon of spending restraint! And that 107% number is just what they publicly acknowledge.
Here’s one example of an accounting trick China uses to keep its full debt off the books.
For decades, Chinese cities weren’t allowed to borrow directly. So as an alternative they set up government-owned companies to do the borrowing for them.
These government-owned companies built the subways, the industrial parks, and the apartment towers, but the debt sat on the companies’ books instead of the government’s.
In November 2024 China’s government finally admitted to trillions of dollars worth of this hidden debt. And they announced a five-year plan to move it onto their official balance sheet.
America’s debt has been growing steadily: a horribly grotesque, absurdly wasteful $2 trillion per year since 2020. But China’s debt takes a quantum leap every time the CCP tells a little more truth.
And by the IMF’s count, China’s real government debt comes to 135% of GDP this year… dead even with America’s.
But Chinese debt pulls way ahead of the US when you factor in actual private debt held by companies and citizens.
Chinese corporate debt, for example, sits at 143% of GDP. US company debt is about HALF of that level. And let’s not forget that the biggest Chinese borrowers are state-owned enterprises where the politicians are ultimately in charge. So I’m suuuuure those company audits are totally above board…
The real question is HOW is this money going to be paid back. And by WHOM?
In January, China’s statistics bureau reported that just 7.9 million babies were born in 2025, down from 9.5 million the year before… and the fewest in modern China’s history. China’s fertility rate is 0.96, not even half of what it takes to keep a population steady. And China’s population shrank for the fourth year in a row.
America’s debt will land on the next generation, which is bad. But at least America HAS a next generation.
Decades of the idiotic one-child policy left China with families with (hopefully) one worker supporting two parents and four grandparents. That same worker will now inherit his share of China’s debt at 135%+ of GDP.
America’s fiscal challenges are immense. But they can be solved with common sense solutions— eliminating obvious fraud, making government more efficient, scaling back regulations that hamstring small business growth, reforming the immigration system, reforming Social Security.
China, on the other hand, needs a time machine to solve its problems. And since no such time machine exists, they just cook the books.
Seriously. A shrinking population is deadly for a nation’s economy. China can’t go back in time to reverse its one-child policy. And they can’t fix it with immigration either— because few people want to move to China!
This is why so many Chinese companies are developing robotics— it’s an absolute necessity there. But even this comes with a major social cost, i.e. higher unemployment.
And China cooks the books on those numbers as well.
When youth unemployment hit 21.3% in June 2023, the bureau suddenly decided that its methods of calculating unemployment needed immediate changes.
Plus any criticism or complaining leads to imprisonment… or worse.
In October 2020, Jack Ma, Alibaba’s founder and then the richest man in China, gave a speech in Shanghai saying China’s banks ran on a “pawnshop mentality” and its regulators were out of date.
Two weeks later the Chinese government killed his payments company’s stock listing, which would have been the biggest in history, and Ma disappeared for three months.
This method of control is why no one can really trust anything from the Chinese government.
That includes their attitude that they will some day rule the world.
When President Trump visited Beijing earlier this year, Xi Jinping asked whether China and the United States could “overcome the so-called Thucydides Trap,” the theory that a rising power and the one it threatens end up at war.
China’s government has spent years telling anyone who’ll listen that America is finished and China’s time has come.
America does have challenges. And there is still some time left to get its house in order to avoid serious consequences.
But China is not its replacement.
