Great Walls of fire: the burning issue in China

Anthony Chan of Alliance Bernstein looks at China's hidden debt and asks it portends a new sub-prime crisis in the region

Is there a new sub-prime debt crisis building in China? Both the markets and the media have been rife with speculation since early this year over the possibility a massive – and hitherto hidden – lending bubble may be building in the world’s most dynamic economy. At the heart of the issue are the liabilities built up by China’s vast number of provincial and local governments as the country has spent its way out of the credit crunch. These bodies – ranging from the 34 provinces, autonomous regions and centrally administered municipalities down to about 40,000 township communities – have b...