Even as China's debt level has soared, with the ratio of private-sector credit to GDP rising from 104% in 2008 to 134% by 2012, China's reported nonperforming-loan ratio is only 1% -- and that figure has changed little over the past few years. Meanwhile, China has experienced an even higher expansion of borrowing as a proportion of its total economy in recent years. If indeed China's bad-debt ratio is now in the 10% to 20% range, that has alarming ramifications: NPLs on such a scale could be the trigger for a serious banking crisis in China, with major regional and global economic implications.