Bad Loans Part 1: Questions Over How Deep the Hole is Stymie New Lending Rules

(Beijing) — The only thing as difficult as fathoming the depths of China's bad-loan pool is finding out how much to trust the data that has been collected.

That's the problem the government faced when it tried to decide this year whether to relax the requirement for provisions that banks must set aside to cushion the impact from non-performing loans.

As of September, commercial lenders in China have racked up almost 1.5 trillion yuan ($216 billion) in bad loans on their books, up from just over 400 billion yuan in late 2011, according to the China Banking Regulatory Commission (CBRC). Their share of total loans has increased from under 1% to 1.76%.