China apparently can't hide its LGFV [local government funding vehicles] problem any more. The fact that these LGFV loans are already going bad in a 'booming' economy makes them analogous to our subprime mortgages in late 2006, only worse.
At Rmb 9 trillion at the end of 2010, LGFV loans equaled 30% of China's GDP. In early 2007, U.S. subprime mortgage debt totaled $1.3 trillion, or 8% to 9% of U.S. GDP. In fact, the Rmb 2 trillion to Rmb 3 trillion that's already been identified as needing to be restructured is close to the U.S.' entire subprime exposure, realtive to GDP.
~ Jim Chanos, founder, Kynikos Associates, May 31st, 2011