Balding Talks Sense on Chinese Debt

A good summary over at his site. Here's one key point that is often repeated in regards to Japan.

Why China Debt Bulls are Mostly Wrong
Myth #2: China does not owe foreign debt. Again, a mitigating factor for sure, but does not fundamentally alter the debt problems. The 1997 Asian financial crisis has programmed most to believe that foreign denominated debt or large foreign inflows is the driver. Financial crises can happen in the absence of a foreign driver. There are many examples of financial crises without major foreign influence. If firms cannot repay their debts, foreign or domestic, that only alters upon who the losses will be imposed and alters the probability for rapid outflows. If firms cannot repay their debts, they cannot repay their debts, and losses need to be imposed.

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