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Here is how the bad loans in China work

Mr Chan buys a high dollar luxury complex and sells it to his brother-in-law Mr Xie for a 15% profit.

Mr Xie sells the building to Mr Wong (His cousin) for a 15% profit

Mr Xie then sells the building to his uncle Mr. Li for a 15% profit

Mr Li sells the building to his friend Mr Pan for a 15% profit.

This all happens in the space of about 2 weeks

Mr Pan sells the building to a group investors from Australia or the US who are looking to capitalize on the booming real estate market in China.

The problems is the building now cost so much that very few Chinese who are not related to Mr Chan, Xie, Wong, Li and Pan can afford the rents.

So not wanting to take an endless loss the group of non-Chinese investors end up selling the building to Mr. Chan at a 50% loss who then sells the building to Mr. Xie.....

All of the Chinese players in this shell game made money Only the overseas investors lost and they had financed through non-Chinese banks. There are cabals of speculators in China that drove the real estate prices up with the intention of dumping the properties on foreigners.

The problem is once those overseas investors get burned they stop speculating in Chinese real estate. Most non-Chinese real estate investors now realize that the Chinese luxury market is way over built. The Chinese conman-speculators can’t unload their over priced inventory. That inventory is financed through Chinese banks.