China: Potential bad debts are now reaching into the USD trillions - Rabobank

Michael Every, Head of Financial Markets Research at Rabobank, notes that Bloomberg reports that China’s potential bad debts are now reaching into the USD trillions (against a USD10.4 trillion GDP).

Key Quotes

“Worse, there is also a reference to off-balance sheet Wealth Management Products growing 73% y-o-y in 2015(!), the stacking of layers of WMP liabilities upon the same underlying (and under-performing?) assets, much like CDOs and CDOs-squared in the US pre-crisis, and that the scale of the problem is such that WMPs account for 40% of one mid-tier bank’s official balance sheet.”