Parent didn't use the word unsustainable, merely "large". And remember "Market can remain irrational longer than you can remain solvent"? There's no particular reason why it should "correct" on any particular timescale. Kick the can hard enough and the problem is solved for your lifetime.
What baybal2 writes, he could have written 10 years ago, heck even 20 years ago. And it would a common view on the state of Chinese economy. Yet through this period China has grown 5-10% pa.
"A sign of things soon to come, I believe." it says.
Nah. The debt will be restructured in some backroom deal. Maybe the central bank lending rates will be lowered a bit. And in ten years the GDP per person in China will have doubled again and all those high rise buildings will be full with people.
These 10 years proved me wrong, and am not sharing much of the optimist opinion in other replies.
I envisioned a scenario of some "backroom deal" at a great public expense, and indeed something like that did happen.
It didn't work. Well in a sense, there were giant bailouts, but that only fired up the furnace, and even more "stealth debt" entered the economy.
China has a few thousands more of Evergrandes, and HNAs lined up.
I bet it will never be fixed within the lifetime of regime, even at the expense of its interest in self-preservation.
And it's because Evergrandes, and HNAs are largely CPC's own making — these companies are the biggest sources of income for local governments, and families of high rank communists: defraud lenders, buy overpriced land from local governments, and hide it super duper well, so your mountain of debt turns into asset, seemingly legitely enriching kids of party members on your board.
It's a very strange scheme of state authorised credit fraud on a nation scale.
I don't think what you are writing is incorrect. And you are certainly correct in that the capital controls are necessary otherwise all these "ill gotten gains" would flee the country.
However I think you underestimate how long time this can be kept up for. China still has many years of out-sized growth ahead of it, and that growth will paint over the bad debt.