[jcfrei]

As the parent noted China has a very high debt to GDP ratio. But more importantly it's really hard to tell in China where the state ends and real capital markets begin (well, they probably don't exist outside of Hong Kong). The Communist Party certainly has a saying when it comes to Chinese banks extending loans to Chinese companies (as a part of their 5 year plans, etc). The US on the other hand has a well regulated and audited capital market. This just means that the debt in China is probably even less sustainable than it appears, which in the long term will either require a gradual depreciation of the Yuan or a constant "cooking of the books" to keep borrowers solvent. The former will cause social unrest when lots of savers see their wealth disappear and the latter just leads to an inefficient economy - with unprofitable "zombie" companies being kept alive by constant loan extensions.

[pjc50]

I don't think depreciation of a currency that isn't fully convertible in a country that's a net exporter is going to be a massive crisis.

(Also, weren't people worried at one point about the huge amount of US government bonds owned by China?)