Much as I dislike it, the fact is that any government can raise taxes (until they hit the point on the Laffer Curve where higher rates == lower revenue ... and

Much as I dislike it, the fact is that any government can raise taxes (until they hit the point on the Laffer Curve where higher rates == lower revenue ... and it's far from clear that China is at that point). Thus, China's "bankrupcy" is nonsense as long as the government is willing to up taxes. Also, just as you have to evaluate the P/E ratio of a company in the light of its growth rate, you have to evaluate the debt of any entity in terms of its growth rate. E.g.: would I be happy to loan $100k to someone earning $25k/yr ? No. ...but what if I knew for a fact that the person's income was going to double every year for the next 10 years? Well, that's a different story: in 10 years, the person's income will be $25 mill/year, and the debt will be trivially easy to repay. China has had a 10% GDP growth rate for a decade now. That means that every decade their GDP is 2.5x higher than before. A "high" debt load (measured in % of current GDP) seems a lot less worrying in that context. To really nail the issue down, you need to figure out if they're going to keep up that growth rate, and China won't grow at that rate forever ... but another 10 or 20 years sounds like a safe bet.