China is facing a mounting debt problem as short term debt matures with 2014 seeing $427 billion of maturing bonds or 19% more than 2013. This has caused the 10 Year AAA rated bond of non-financial companies in China to increase to 6.23% and increasing. To put this number in comparison, Greece is only paying 8.8%. In other words, AAA rated Chinese companies are coming increasingly close to the credit quality of Greece.
Nor is this debt explosion limited to Chinese corporates. According to one Chinese financial news paper, 10 Chinese provinces have increased debt by $3.3 trillion USD or 20 trillion RMB since June! Despite Beijing assurances that there was no grand stimulus package like 2008, Chinese provinces have taken up the slack. Sichuan doled out a local stimulus package equal to 180% of GDP and no that is not a typo.
Despite the reassuring and inflated GDP, the fire breathing Chinese debt dragon still lurks.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.