Interesting FT piece on the underground banking in China known as minjian jeidai.
Basically it's Chinese companies borrowing short-term money from wealthy households instead of banks via a broker. Households want better opportunities to use their investment money and banks find it hard to get such loans from banks, so everybody happy!
The problem is that anything that unregulated can have surprising impact, depending on the size of the flow, which nobody really knows. Some bankers guess it's equal to about 10% of any locality's ongoing finance.
Point of piece by Gillian Tett: compared to the now vilified West, China's state capitalism isn't exactly lacking in unregulated financing, and it's overall lack of financial transparency suggests that underground banking may be just a fraction of what we don't know.
Bottom line: lots of bets being placed on future Chinese growth, even though "very few western investors really know that much about what is--or is not--happening at the grass roots in China now."
Not all that different from the US housing market five years ago, she ends.
Sobering thought.