(Yicai) May 28 -- China’s national debt has surpassed CNY100 trillion (USD14.74 trillion) for the first time. Experts say the overall risk remains manageable and there is still room for further borrowing, but priority should be given to optimizing the debt structure and improving the efficiency of debt-funded spending.

China's government debt was about CNY101.15 trillion yesterday, according to data from corporate risk analytics platform Enterprise Alert. It stood at CNY95.6 trillion at the end of last year, with a debt-to-gross-domestic-product ratio of 68 percent, far below Japan’s at over 200 percent and the United States’ at over 100 percent.

Debt risks cannot be judged by absolute scale alone, Luo Zhiheng, chief economist at Yuekai Securities, told Yicai. The quality of assets created by the debt, the size of the economy, and government revenues must also be taken into account, he pointed out.

China's government debt has been channeled mainly into transportation, water conservancy, and energy infrastructure, generating a large inventory of high-quality assets, he noted, adding that progress has also been made in resolving hidden local government liabilities.

Unlike most borrowing in advanced economies, which is aimed at short-term economic stabilization, China’s is mainly used to build medium- and long-term development capacity, said Mao Jie, professor at Shanghai University of Finance and Economics. This means greater attention should be paid to debt structure and efficiency rather than the debt-to-GDP ratio alone, he noted.

China’s debt is mainly domestic, the national savings rate remains above 44 percent, and external debt accounts for only about 5 percent, so external risk exposure is low, allowing the country to manage its debt smoothly without being affected by external factors, Yuan Haixia, fiscal policy expert and director of the China Chengxin International Research Institute, told Yicai.

But structural risks remain, including ongoing liquidity pressure in fiscally weaker regions and project returns from special-purpose bonds that have fallen short of expectations, she warned.

The fact that China's national debt has grown more than 10 percent annually  in recent years, outpacing both GDP and fiscal revenue growth, reflects a necessary policy response to economic headwinds, Luo pointed out.

The key to balancing growth and fiscal sustainability does not lie in the absolute size of debt but in its structure and efficiency, according to Yuan, who called for a shift in focus from “adding leverage” to “optimizing leverage” and an increase in the proportion of central government debt to allow central fiscal authorities can shoulder more cross-regional and strategic spending.

Yuan also said the share of general bonds within local government debt should be increased, while special-purpose bonds should return to their original purpose of financing projects that can achieve self-sustaining repayment. Spending priorities should shift from infrastructure alone to a broader balance between investment in people and physical assets, with greater support for education and healthcare, she said.

The rapid pace of debt accumulation warrants vigilance and calls for sustained attention to fiscal sustainability, said Wen Laicheng, professor at Central University of Finance and Economics.

Editor: Futura Costaglione