China's Unyielding Banking Crisis

Corruption and Cronyism Often Thwart Efforts to Eradicate Bad Debts

By Peter S. Goodman

Washington Post Foreign Service

CHENGDU, China -- As he rose through the ranks at China's largest lender, Zhang Guilin helped build the bad debt crisis plaguing his country's banks, the gravest threat to this fast-growing economy. Zhang directed funds to cronies and political allies, authorities here say, adding to a national toll of bad loans estimated at $500 billion."

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As a side note, HeavyHanded says: They have alot of bad loans in their economy, as stated above, and it's estimated that the bad debts total about 40 percent of their GNP.