In the China Daily today, there is a story about potential non-performing loans with almost 25% of local govt debt maturing this year. The chief economist at the state-owned Agricultural Bank of China expects the government to change the rules to avoid defaults:
“The banks are waiting for new policies, probably extending the tenure of the loans. The government must do something to resolve loans that probably would default,” he said, adding that such loans are “absolutely dangerous”.
Making predictions about when China will falter is extremely difficult when it’s this easy to kick the can down the road.
