I have long been intrigued by how two very different economies, the U.S. and Chinese, resemble each other, especially in their dependence on debt. Both are addicted to massive credit and cannot break the addiction.

They embrace debt for different but comparable reasons. China is obsessed with economic growth, both to satisfy the material wants of its population and to parade economic power. The U.S. seeks to prevent its economy from seizing up and plunging.

Both have worked. China grew around 10% a year (now lower), and the U.S. has tamed major slumps. China’s five giant state-owned banks pump out whatever credit Beijing tells them to. The U.S. Fed has deregulated our banks so they pump out credit with little regard to risk.

This, unfortunately, incentivizes the “moral hazard” of continued misbehavior. Because they are largely protected from their own foolishness, big banks keep making risky loans. Figuring they’re “too big to fail,” they expect and get massive bailouts, as U.S. investment banks did in the 2008 subprime meltdown — while mortgagees lost their homes.

Both Beijing and Washington face the dilemma of either letting giant, overextended investment banks suffer from their reckless bets or avoiding years of recession and unemployment. The theory of markets says let fools punish themselves — the only way to teach them caution — but governments won’t willingly damage their whole economy.

So they save fools from themselves. Well, just the too-big fools. We must remember that “debt” is not just the accumulated deficits of the national government but business and consumer debt (which includes home mortgages) as well. Both the U.S. and China have big debts in all three.

To what extent is massive debt necessary to keep a modern economy from slowing? If it is, trying to minimize debt could throttle economic growth and lock the economy into stagnation (e.g., Portugal under Salazar). Marx, if memory serves, had little or nothing to say about debt propping up a national economy. That task fell to Keynes, who urged deficit spending to counter recessions. Now, even Chinese Communists are Keynesians.

There are other similarities. Because bank interest is so low, both American and Chinese savers despair of banks and buy into stock and real estate bubbles, which periodically burst. Both countries have large and rising income inequality. Our big middle class shrinks. China — officially dedicated to workers and peasants — is embarrassed at its millionaires and now emphasizes “common prosperity,” that is, a narrowing of the income gap.

Both the U.S. and China have trouble collecting taxes on the wealthiest. The newly released “Pandora Papers” reveal the rich and powerful worldwide stashing millions overseas. Chinese capital flees through Hong Kong and Macau, American through Caribbean banks. The difference: China arrests alleged financial wrongdoers, frightening both state and private executives into by-the-book caution.

American avoiders are shielded by “perfectly legal” trusts and shell companies. The Pandora Papers also reveal that South Dakota’s privacy rules make it a haven for evasive and secretive trusts, many of them foreign. Well, at least we’re competing with the Cayman Islands.

Beijing, worried about debt, corruption and bad investments, tightens state controls even though it slows growth. For Xi Jinping, control is everything. America, where economic controls are indirect and dispersed, moves slowly and disjointedly. No one is in overall charge.

China’s labor force is shrinking and aging. Many Chinese apartments stand empty. Real-estate colossus Evergrande has unfinished apartment blocks and $303 billion in debt. Some Chinese have prepaid for apartments they may never occupy. Evergrande’s collapse could cascade through China’s finances, especially hitting shaky “shadow banks,” wiping out the savings of millions of Chinese and delegitimizing Communist rule. To protect the system, China punishes top executives but is cautious about dismantling large firms.

The long-term problem in both countries is that profligate lending encourages foolish investments that crowd out productive sectors of the economy. Why build industries that produce things and jobs when you can profit from reselling cheap loans (e.g., Brazil under the generals)? Today, gambling with cryptocurrency builds no sustainable growth.

China is cracking down on crypto; we aren’t.

There is no clear trigger-point where debt starts sinking the economy. Conservatives recoil in horror that U.S. public debt now tops 100% of our GDP. Sounds ominous until you learn that China’s and Japan’s are both well over 200% with no deleterious effects so far. International trade, however, depends on reliable dollars; RMB and yen play small roles. Beijing would love confidence in the dollar to slide in favor of its RMB, and it could happen.

The problem is not debt per se. Every modern economy needs ample debt. The problem is the way debt is used — for production, education and infrastructure or for asset inflation in stocks and real estate.