Everyone agrees China faces a serious debt problem. How did this problem develop?

Cleaning Up China’s Debt: Q&A by Andy Rothman, Matthews Asia

A leading cause for concern over the health of China’s economic prospects is its debt burden. Since writing about this topic last year, I’ve received many questions from investors, so in this issue of Sinology, I share my responses to those questions.

The debt problem is serious, but the risk of a hard landing or banking crisis is, in my view, low. The key reason for that is that the potential bad debts are corporate, not household debts, and were made at the direction of the state—by state-controlled banks to state-owned enterprises. This provides the state with the ability to manage the timing and pace of recognition of nonperforming...