Global Debt Tops $365 Trillion As China, US Lead Borrowing Surge

Global debt climbed to a record high of more than $365 trillion in the first half of the year, with China and the United States accounting for the bulk of the increase, according to the latest findings by the Institute of International Finance (IIF) that come amid mounting concerns over global fiscal sustainability.

The figure reflects total debt across all four major borrowing sectors – government, household, financial and non-financial corporatein more than 100 mature and emerging market economies, and it marks the sixth consecutive quarterly increase, according to the banking trade group’s latest “Global Debt Monitor” report, published onWednesday.

Emre Tiftik, director of global markets and policy at the IIF, said the current debt wave differed from earlier ones, which were triggered by shocks such as the 2008 global financial crisis and the Covid-19 pandemic. “This time around, there is no specific crisis,” Tiftik said on Wednesday. “This is all driven by a super-cycle that is driven by healthcare, energy, AI, and IT and defence-related spending.” Because the spending is structural rather than cyclical, “debt is here to stay”, Tiftik added.

Global debt rose by $10 trillion in the first six months of 2026 – less than half of the expansion recorded in the same period last year, constrained by higher borrowing costs and volatility linked to the war in Iran, the IIF said, noting that the moderation was most evident among financial institutions and households.

China alone accounted for more than $4.8 trillion of the new borrowing, pushing its total outstanding debt to $72.5 trillion, according to calculations based on IIF data.

The rise highlights mounting fiscal pressures across China, where declining land-sale revenue and a prolonged real estate downturn have strained local government income. Corporate debt has also grown, with a number of companies grappling with thinner margins amid weak domestic demand and intense price competition.

Meanwhile, in the US, total debt rose $3.5 trillion to $111.8 trillion over the six months, data from the IIF showed. This appeared largely driven by the financial sector and government, with federal debt reaching 122.3 percent of gross domestic product in the second quarter.

US federal debt surpassed $40 trillion for the first time in August, according to the US Treasury Department, intensifying concerns over the country’s long-term fiscal sustainability. Long-term US Treasury yields – the interest rate the government pays to borrow money over extended periods – have climbed in recent months to levels unseen since 2007. Total foreign government holdings of US Treasury debt fell for a second consecutive month in July, as Japan and China – two of the three largest creditors – trimmed their positions, according to the latestofficial data.

However, despite ongoing debate over the US fiscal outlook and the safe-haven status of the dollar, the IIF noted that appetite for US debt has persisted, buoyed by expectations of high interest rates.

“US securities remained well bid despite heightened volatility and speculation, partly because alternative markets lack comparable depth and liquidity,” the IIF’s report said.

“The key question is what could trigger an inflection point in dollar demand,” the trade group added, warning that market reactions could sharpen as structural pressures, including the rising cost of servicing US debt, become more visible.

A growing wave of corporate borrowing linked to artificial intelligence has not yet crowded out US Treasuries or diverted capital from emerging markets, with the share of global bond issuance from non-financial companies remaining stable, the IIF said.

However, a sustained roll-out of long-dated AI-related corporate debt could eventually add pressure to long-term Treasury yields, the group warned.