Title: The Chinese Government's Leverage Rises to All-Time High While Private Sector Began to Repair its Balance Sheet

Author: ZHANG Xiaojing, LIU Lei and CAO Jing

In the first quarter of 2025, China's macro leverage ratio surged by 7.8 percentage points to 298.4%, making it the highest single-quarter increase in nearly a decade. The government leverage ratio hit a new two-decade high, a trend that has actively supported the repair of private-sector balance sheets and fueled a robust economic rebound at the start of this year. Meanwhile, the household sector has shifted from deleveraging to leverage stabilization, while the corporate sector showed a tendency to increase leverage. These developments collectively underscore the effectiveness of macroeconomic governance innovation based on national macro balance sheet management.