Circumscribing China’s NPL "Puzzle"

The problem of the Chinese financial system with non performing loans is significant and murky. If China's non performing loan problem exists on a certain level of severity and is not trending toward a more manageable state, then China could be moving toward financial crisis. Empirical and theoretical studies in recent years have implied that this might be the case. It might be impossible to conclusively prove or disprove notions that non-performing loans will cause financial crisis in China. However, little academic inquiry has very recently been focused toward the holistic "puzzle" of China's NPL issue, and it could be considered worthwhile to simply attempt to trace a broad outline of the issue. The aim of this study is two-fold: first, it attempts to basically identify and circumscribe the different "puzzle pieces" that exist in trying to understand China's bad asset issue. Second, it aims to combine basic perspectives on the issue from multiple disciplines in a generalized way, and tentatively evaluate the inventoried "puzzle pieces" to propose a limited holistic interpretation of available facts and opinions.