- China’s government debt reached $18.7T in 2025, surpassing the EU for the first time.
- U.S. debt climbed to $38.3T, remaining the world’s largest by a wide margin.
- Since 2008, China’s debt has grown more than twice as fast as the U.S. and far faster than Europe.
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While the EU’s slower debt growth partially reflects weaker nominal growth across the bloc compared to the U.S. and China, it also is a symptom of the bloc’s tighter fiscal constraints after Europe’s sovereign debt crisis, which peaked between 2010 and 2012.
In contrast, China’s surge in debt was driven by credit expansion, infrastructure spending, and state-backed growth.
The U.S., meanwhile, combined crisis-era borrowing with persistent deficits, especially after 2020, allowing debt to scale far beyond Europe’s. With fewer fiscal constraints at the federal level, Washington has maintained higher spending levels.
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Deflation is negative inflation. My math above is correct.