From the global financial crisis onwards, the debt-to-GDP ratio for China has grown by a third, based on International Monetary Fund estimates. The debt ratio for local governments (inclusive of local government financing enterprises) has grown by two-thirds; for households it's grown by nearly half; and for corporates (inclusive of state-owned enterprises and quasi-public sector entities) by nearly a third. This growth in corporate debt has been with the tacit approval of China's central government, given the dominance of the state-owned commercial banks in the financial system. At the current growth rate, China's corporate debt could end up costing the country's banks dearly, according to S&P Global Ratings. The agency has estimated that if the growth doesn't slow, the ratio of problem credit to total credit facing China's banks could triple to 17 per cent by 2020. (Problem credit here is defined as nonperforming credit plus special mention loans)."We believe China's banks and financial system can withstand higher nonperformers," said Qiang Liao, a credit analyst at S&P Global Ratings. "However, in the downside scenario where the current growth rate continues unabated over the next five years, the likely rise in nonperforming debt could place greater strain on the financial sector, possibly leading to some bank recapitalisation."At those levels, China's bank could be called on to raise fresh capital of up to RMB11.3 trillion (US$1.7 trillion) - equivalent to 16 per cent of China's 2015 nominal GDP."Admittedly, such growth would worsen corporate debt leverage, which may lead to a higher level of problem loans," added Christopher Lee, a credit analyst at S&P Global Ratings. "In the base case, we project the problem credit ratio could double to ten per cent by 2020 from our 2015 estimate of 5.6 per cent." These are some of the top-line conclusions from an annual study of the top 200 companies in China by S&P. The risks of rising debt levels and delinquencies in China were also cited in a survey of 50 attendees at Moody's Asia Pacific Structured Finance Conference in Singapore on 27 September.One question tested expectations regarding delinquencies for Chinese auto loans in 2017. Here, the majority of those who responded to the Moody's poll (54 per cent) expected auto loan asset-backed securities delinquency rates to remain stable in 2017, even though economic developments in China will be a key driver of structured finance credit trends."On this topic, Moody's expects Chinese auto loan ABS delinquencies to remain stable in 2017 at around the same level as in 2016. The exception will be any securitised pools with a high concentration of auto loans from lower-tier cities, where we expect delinquencies to increase moderately. Borrowers from lower tier cities are typically of lower credit quality," said Yian Ning Loh, a senior vice president at Moody's.On the question of what is the most important factor for the healthy development of China's structured finance market in the next several years, 53 per cent of respondents nominated ABS law and regulatory support, while 37 per cent indicated that