, Columnist
China's Veiled Loans May Prove Lethal
A sixfold jump in receivables in three years portends trouble.
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Credit is a risky business, but loans that dare not speak their name? They are possibly even more dangerous, as China is about to find out.
As many as 15 publicly traded Chinese lenders, large and small, report roughly $500 billion of such debt between them, which they hold not as loans but as receivables from shadow banking products. While the traditional credit business of these banks is 16 times bigger, receivables have jumped sixfold in three years. Explosive growth of this type usually ends badly. It's hard to see why it'll be different for the People's Republic.