Why China has a dollar-denominated debt problem.

• Position: Off the News

On the issue of China's foreign exchange reserves and its enormous accumulation of dollar-denominated corporate debt since 2010, European officials are suggesting that China's corporate debt holdings are much larger than even the Bank for International Settlements statistics indicate. So much of this dollar-denominated debt was taken on during the 2009-2010 period when the Chinese elite community bought into the notion that the U.S. financial system and economy were both a giant train wreck of unsustainable trillion-dollar debt. Then, the one certainty throughout elite Chinese...