From the perspective of debt structure, China’s high leverage trap has made traditional macroeconomic stimulus policies increasingly ineffective, even counterproductive. After years of a credit boom, China’s total debt has nearly reached three times its GDP and continues to rise rapidly. By the end of 2024, the broad credit balance is expected to reach 408.3 trillion yuan, or 303 percent of GDP. If the statistical standards are adjusted, it could be closer to 310 percent. This means that for every additional 1 yuan of GDP, over 5 yuan of debt is required to support it, and compared to pre-pandemic levels, credit efficiency has been halved.
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