Well this isn't good. The Wall Street Journal has a story about the growing credit bubble in China . Dinny Mcmahon and Colum Murphy write:
Analysts at Standard Chartered PLC estimate that Chinese corporate debt was equivalent to 128% of gross domestic product by the end of 2012, up from 101% at the end of 2009. In a 2011 research paper, economists at the Bank for International Settlements found that when a country's corporate debt exceeds 90%, it becomes a drag on growth.
While accessible loans may be good news for China's struggling companies, it could be bad news down the road. Some economists worry such heavy debt in China's financial system could create serious problems for the economy if borrowers are unable to meet their obligations. Soured loans could ultimately force companies to consolidate—which could lead to politically unpalatable job losses—or force leaders into some sort of expensive bailout.
The news is yet more evidence that a significant proportion of China's growth could be illusory. Chinese infrastructure spending  is notoriously wasteful, leading to the creation of ghost cities , collapsing bridges  and impossible promises .
So much of the rest of the world's economy is based on Chinese growth remaining well about 5 per cent that the prospect of that not happening — a so-called "hard landing" — is usually held up as the third of the big economic disasters waiting to happen, after a US debt-ceiling default and a Eurozone breakup.
If the private economy is as unsustainably inflated as the state sector is, that hard landing is looking uncomfortably possible.