Unregulated unofficial loans. They have played a major role in developing China’s economy outside of the rigidly regulated financial sector. However their total

Unregulated unofficial loans. They have played a major role in developing China’s economy outside of the rigidly regulated financial sector. However their total value and creditworthiness is not entirely known. The Chinese government doesn’t want to shut down the shadow debt markets wholesale, because of their outsize influence on the economy, but for the same reason they don’t want shadow lending to get too out of hand either. If there is a credit crunch or economic contraction, it will be harder to manage the consequences of unofficial debt than official debt.