The US foreign debt has exceeded $25 trillion, which is 10.3 times that of China's foreign debt!
It is common to see statements that "domestic debt is not debt, external debt is debt". Although this view is open to debate, it vividly tells us that the external debt owed by any country must be much lower than the internal debt. There is still a longer way to go to prevent foreign debt default.
At the beginning of this year, the National Development and Reform Commission (NDRC) issued the Administrative Measures for the Review and Registration of Medium and Long-term Foreign Debts of Enterprises, which clearly mentioned that it would support the development of the real economy and provide market players with a more stable and predictable foreign debt management system with the core of preventing foreign debt risks.
Does this mean that China's external debt balance is very high?
The National Development and Reform Commission (NDRC) has issued a special administrative measures for the review and registration of foreign debts, which have been interpreted by some media as "China's external debt balance is already very high and high, and risk management has become the focus".
Statistically, this is an overstatement. As of the end of June 2023, the balance of the mainland's full-caliber external debt was US$2,433.8 billion, a decrease of US$312.8 billion, or 11.4%, compared with US$2,746.6 billion at the end of 2021.
Among them, the balance of external debt of commercial banks was US$1,046.6 billion, the balance of external debt of other departments (including loans between affiliated companies) was US$904.3 billion, the balance of external debt of government departments at all levels was US$403.3 billion, and the balance of external debt of the central bank was US$79.6 billion.
The foreign debt of nearly 2.434 trillion US dollars is lower than that of the United States, Britain, France, Germany, Japan, the Netherlands, Luxembourg, Canada, Spain and other countries in the world. However, China's GDP ranks second in the world, and from the perspective of asset-liability ratio, China's external debt burden is not high at all.
More importantly, the foreign exchange reserve assets of the mainland central bank exceed 3 trillion US dollars, and the foreign exchange assets held by commercial banks, enterprises, and residents are superimposed, how much risk can the 2.434 trillion US dollars of foreign debt be?
As of the end of 2022, the balance of the US external debt exceeded $24.5 trillion, 10 times the amount of the mainland's external debt.
By the end of June this year, the balance of US foreign debt had managed to exceed $25 trillion – widening to a high of $25.1 trillion. However, the balance of the mainland's external debt fell slightly to $2.434 trillion, and the US external debt is already 10.3 times the amount of the mainland's external debt.
What is even more puzzling is that the US political circles have not shown "the slightest concern" about such a huge amount of foreign debt. Doesn't it say that "foreign debt is the real debt", and why doesn't this theory apply to the United States?
The answer is to distinguish: external debt, the difference between foreign currency debt
As of the end of June this year, the balance of the mainland's full-caliber external debt was $2.434 trillion. Among them, the local currency external debt, that is, the balance of external debt registered in RMB, was converted into US dollars to be 1,080.8 billion, accounting for 44%.
The remaining 56% of the external debt is foreign currency debt registered in US dollars, euros, British pounds, Japanese yen, and Hong Kong dollars, and the total amount is converted into US dollars 1,353 billion - 1.353 trillion US dollars, which should be recorded.
Looking at the United States, the data as of the end of June this year is also the same! The balance of the US foreign debt exceeded $25 trillion, a new high. Among them, the balance of the U.S. foreign debt in local currency, that is, the foreign debt registered in US dollars, is close to 21.56 trillion US dollars.
The balance of U.S. foreign debt registered in foreign currencies is only $1.56 trillion, and there is still $1.98 trillion worth of foreign debt — the name is undistributed foreign debt, which means it is not known whether it is registered in foreign currency or in local currency.
The answer is revealed, the total amount of foreign debt of the United States seems to lead the world, but the core of the foreign debt of the United States is "foreign debt in local currency", and there are not many "foreign currency foreign debts" that the United States really needs to use foreign exchange to repay.
More importantly, the U.S. dollar is the strongest currency in the world today, and the U.S. dollar is a strong global currency. The United States can use the U.S. dollar to exchange the foreign currency it needs in the international market, and then repay the foreign currency foreign debt that is due. This is something that many other countries struggle to do. This article is written by Nansheng, please do not reprint or plagiarize without authorization!