And you thought Chinese debt is invincible?

And you thought China is invincible? Great article from Jim Jubak about Chinese debt, government creative accounting and a guide of “how to get the debt out of books” … quoting the author: “A favorite tactic of politicians, Republicans, Democrats, and Communists alike, is to punt, so that today’s problem becomes somebody else’s problem in the future.”

Some interesting passages:

China’s new debt problem is the thousands of investment companies set up by local governments to borrow money from banks and then lend it to local companies. By law, China’s local governments can’t borrow directly. But the incentives for local governments to set up investment companies were huge.

Together, the debt plus the credit lines come to $3.8 trillion. That’s roughly equal to 75% of China’s GDP. None of this, Shih points out, is included in the IMF calculation of China’s gross-debt-to-GDP figure of 22%. If it were, the number would be closer to 100%.