US vs. China: Which Economy Faces a Bigger Crash in 2026?

TOKYO — A new economic fear is spreading from Tokyo to Wall Street. Experts warn that both the United States and China are inflating dangerous financial "bubbles." The question is: which one will burst first? The US bubble is centered on its massive government debt, now over $38 trillion. President Donald Trump's unusual public criticism of the Federal Reserve is alarming global investors. His pressure on the central bank creates uncertainty about US economic policy. Asia holds a unique risk. The region is the largest owner of US Treasury debt. Any serious drop in the dollar's value or a US debt crisis would hit Asian economies hardest. For decades, betting against the US dollar has been a losing trade, but fears are growing. China faces a different bubble. Its economy is struggling with a severe property market crash and weak consumer spending. To boost growth, Chinese authorities are flooding the financial system with cheap credit. This strategy risks creating overcapacity—where factories produce more goods than the world can buy. It also may only delay a necessary economic restructuring. The outcome of this high-stakes situation remains unclear. The world's two largest economies are on precarious paths, with the stability of the global economy in the balance for 2026.