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The biggest problem facing the global economy today is the debt problem.
As the global economy expands, governments and businesses have to rely on borrowing and issuing bonds to drive their country's economic growth and meet demand. Global debt has climbed to a staggering $300 trillion, creating enormous uncertainty and risk to the global economy.
Among them, the US debt is particularly exaggerated, accounting for more than 10% of the global debt, and the balance of US Treasury debt has exceeded $33,000 billion so far.
Compared with the GDP of the United States in 2022, the current proportion of debt has exceeded 140%, and what is more worrying is that the balance of US debt is getting higher and higher, and the risk of default is getting higher and higher.
The rapid issuance of U.S. bonds by the United States may also lead to excessive debt accumulation and increase pressure, but if the debt grows too fast, it will adversely affect future economic development.
Therefore, all countries are paying special attention to the additional issuance of US debt.
Moreover, the debt problem of the United States also has an impact on the global economy, which may trigger financial instability in the global economy and the world.
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During the global pandemic, the global economy has been hit hard. In response to this dilemma, countries have taken measures to stimulate their economies, including issuing large amounts of debt.
Debt has increased dramatically, not only in the United States, but also in many other countries.
The rising debt scale of some developing countries has led to higher debt-servicing pressures and financial difficulties.
Some developed countries are also plagued by debt problems, and like the United States, they are facing the problem of rising yields and falling prices of government bonds.
But why is everyone paying more attention to U.S. debt?
That's because, in the past, the United States was able to borrow at a relatively low cost, mainly because the dollar was widely recognized by global investors as the world's most important reserve currency.
Due to the hegemony of the dollar, global trade and financial transactions are generally denominated in dollars, which makes other countries have to rely on the dollar when conducting international transactions. This dependence makes other countries vulnerable to dollar fluctuations and U.S. policy changes, adding to global economic instability.
But the problem now is that the cost of U.S. bonds is getting higher and higher, and the yield on U.S. bonds in the early 10-year period of 2022 was just over 1%, but now it has reached more than 4.5%, and the interest that the U.S. Treasury needs to pay annually is getting higher and higher for the current huge size of U.S. bonds.
Not to mention the principal of 33,000 billion, which is close to 1,000 billion in interest every year, there is now the possibility of default.
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Relatively speaking, China's debt is significantly smaller and its burden is much lower.
According to the latest data, as of the end of July this year, China's debt reached $15.67 trillion, including national debt, local government debt and urban investment bonds, but China's debt accounted for 94.2% of GDP.
China's debt is mainly used to invest in physical projects, especially in the infrastructure sector. Infrastructure construction such as highways, high-speed railways, and bridges is the main use of China's debt funds. These investments help drive economic growth, improve transportation, and promote regional development.
That is to say, our debt can bring economic returns, and relatively speaking, a lot of the US debt is constantly filling the debt hole of the past.
Moreover, the interest rate of our current national debt is very low, basically fluctuating around 2.5%, so the annual debt repayment pressure is far lower than that of the United States.
In addition, the economic growth rate is also a very important factor. In the first half of this year, the mainland's GDP growth rate reached 5.5%, much higher than that of the United States, and with economic growth as a guarantee, debt risk is under control.
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