Christopher Langner is a markets columnist for Bloomberg Gadfly. He previously covered corporate finance for Bloomberg News, and has written for Reuters/IFR, Forbes, the Wall Street Journal and Mergermarket.

There's at least half a trillion dollars missing from the overall debt figure China released this morning.

According to a Bloomberg News report, the nation's publicly traded companies have about $590 billion in accounts receivable on their balance sheets, up 23 percent from two years ago. That's credit to other companies and customers that doesn't show up in China's total social financing aggregate figures. It's money moving in the shadows, and further evidence of the debt dangers that face the world's second-biggest economy. 

The rise shows two things: Chinese companies are having a harder time getting paid, and they're providing more credit, in some cases almost acting as a bank. At the end of last year, receivables on average represented 15.7 percent of sales at China's 100 biggest listed companies by assets. That doesn't look so bad when compared to a similar group of companies in the U.S., where the average was 14.7 percent. The trajectory is what sounds alarm bells:

Company Credit
Receivables as a percentage of sales at the 100 biggest listed companies in China has almost doubled over the past five years
Source Bloomberg

The sheer amount of credit being extended to customers is more concerning in certain sectors. Companies in the property, technology, machinery and power equipment businesses have been demonstrating a leniency around collecting debts that's seldom seen in the West.

Heavy-machinery maker Zoomlion tops the list, with receivables equal to 133 percent of sales last year. To put that another way, there were more unpaid-for cranes and cement mixers in customers' hands than actual sales Zoomlion booked. Caterpillar, which competes with Zoomlion in some sectors, had receivables that amounted to 33 percent of revenues.

Next on the list is hydro and power-steam generator outfit Dongfang Electric. It had receivables equivalent to 61 percent of turnover. For South Korea's Doosan Heavy, it's about 16 percent.

Mixed Identity
Some of China's biggest companies have so many receivables they could be called banks
Source: Bloomberg

Analysts usually get concerned when receivables start to mount because it could be a sign a company is facing headwinds. Either it's having more difficulty collecting money for sales that were made on credit, or it's providing short-term incentives for sales that eat into profits. 

When this happens on a nationwide scale it may signal a bigger problem, especially as bad loans in China soared to the highest in a decade in 2015. Beijing needs to start taking a close look at how much credit is hidden on corporate balance sheets. Shareholders, too, need to get into the habit of examining that particular line item. If it's a shadow bank they're unwittingly investing in, that's something they should know.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Christopher Langner in Singapore at

To contact the editor responsible for this story:
Katrina Nicholas at