Economic Daily: The high debt model of developed economies is unsustainable.

Last week, driven by a sharp drop in US and Japanese bond prices, the global bond market experienced a collective "sell-off". This turmoil was triggered on the surface by the threat of US tariffs on Europe and Japan's expansionary fiscal policy, but the core issue lies in the growing concerns in the global market about the unsustainable high debt development model of developed economies. The debt dilemma of developed economies stems from multiple contradictions. On one hand, they have long relied on debt-driven growth, creating a path dependence of "borrowing new to repay old"; on the other hand, an aging population is pushing up welfare spending. For example, social security expenditures in EU countries are quickly approaching 30% of GDP, and the rise of European populism is also intensifying the financial rigidity by pushing for an expansion of welfare policies. In addition, in recent years, to deal with pandemics, geopolitical conflicts, and industrial competition, countries like the US and Japan have continued to expand fiscal spending, leading to a dangerous increase in debt levels. This round of bond market turmoil reflects the harsh reality that the game of "borrowing new to repay old" in developed economies is unsustainable. When high interest rates reveal fiscal vulnerability and political infighting hinders structural reforms, the era in which developed countries rely on debt expansion for economic growth is nearing its end. Perhaps a long fiscal deleveraging and financial order restructuring are imminent.