The federal deficit in the United States is expected to hit $1.9 trillion in the fiscal year 2025, which is roughly 2.4 times larger than the anticipated shortfall of 5.66 trillion yuan (approximately $780 billion) in China.
Data shows that the US Treasury recorded a $1.15 trillion deficit over the first five months of the fiscal year (October to February), reflecting a substantial 38% increase compared to the previous year.
The Congressional Budget Office projects that the total deficit for the year will account for 6.5% of GDP, well above the 50-year average of 3.8%, driven by rising costs related to entitlements and interest payments.
Debt servicing expenses alone reached $396 billion during the same five-month period, while federal revenue growth has stagnated at about 1% year-over-year.
In contrast, China’s Ministry of Finance aims for a deficit target of 4% of GDP for 2025, marking the highest level in over thirty years.
While the reported figure may appear smaller, adjusted assessments from analysts suggest that China’s true fiscal deficit could be closer to 8.8% of GDP when taking into account off-budget borrowing.
This increase is indicative of a strategic pivot toward infrastructure investment, expanded subsidies, and measures aimed at countering the ongoing downturn in the property sector, as detailed in Beijing’s Government Work Report.
The scale and pace of US debt accumulation have sparked renewed discussions about the future of the dollar as the globe’s primary reserve currency.
The Role of Bitcoin Amid Growing Sovereign Debt
The CEO of a major investment firm recently cautioned that the rising US deficits might undermine global trust in the dollar, potentially paving the way for alternative financial assets like Bitcoin. Bitcoin’s decentralized framework and capped supply have led many analysts to view it as a safeguard against the devaluation of fiat currencies.
In light of these concerns, the notion of Bitcoin as a strategic reserve asset is gaining traction in policy discussions. One former president signed an executive order to create a national Bitcoin reserve using funds confiscated from criminal cases, framing digital assets as mechanisms for enhancing fiscal stability.
Nevertheless, challenges remain. Bitcoin’s volatility in value and the uncertainty around its regulatory future continue to be significant issues. For instance, the European Central Bank has ruled out the possibility of including Bitcoin in its reserves, with the institution’s president stating it will not happen during her leadership.
As US debt growth outpaces China’s fiscal challenges, conversations regarding reserve diversification, particularly with respect to Bitcoin, are likely to escalate.
Supporters highlight Bitcoin’s deflationary characteristics and its separation from central banking influences, while the strength of critics’ arguments regarding its volatility and ambiguous regulations is diminishing.
With increasing uncertainty surrounding the future of global monetary policy, the pursuit of alternative solutions to mitigate systemic fiscal risks may ultimately guide attention toward Bitcoin.