Is China the next big crisis?

[marmar]

More warnings on China’s debt
Commentary: Shadow banking sparks new worries

By Craig Stephen


HONG KONG (MarketWatch) — Three years ago, China’s banks were widely applauded as they lent their way out of the last financial crisis, hauling much of the world with them. But now with these loans coming due and interest rates on the rise, officials and analysts are increasingly sounding the alarm.

Throw into the mix new revelations about the escalation of shadow banking, and it’s little surprise “China” and “subprime” are increasingly talked about in the same breath.

So far, the loans causing most unease are with local-government investment vehicles, estimated at up to $1.7 trillion. Cheng Siwei, a former vice-chairman of the standing committee of the National People’s Congress told the World Economic Forum last week in Dalian: “Our version of the U.S. subprime crisis is the lending to local governments, which is causing defaults.”

But this is by no means the only lending worry on the horizon. ............(more)

The complete piece is at: http://www.marketwatch.com/story/more-warnings-on-chinas-debt-2011-09-18