PortfolioWhat’s the chance China will collapse under its debts? About 15 per cent.

The chance that China will have a systemic debt crisis - it’s around 15 per cent, give or take.

That’s the outcome economists at French bank BNP Paribas expect if the world’s second largest economy does not address its fast growing debt pile.

Or to be more specific, the country’s fast growing non-financial corporate debt pile. Debt at household, as well as national and local government level is, for the most part, manageable, writes the bank’s chief China economist Chen Xingdong and his colleagues.

In a report examining whether debt levels will overwhelm the country they write: “Aggregate debts have grown too fast since 2008 to be sustainable…The debt interest costs are too high, at about 15 per cent of GDP per annum.”

The run up started when Beijing pumped trillions of yuan through the nation’s banks in a massive stimulus effort after the financial crisis upended the global economy in 2008. Chinese GDP initially stabilised but concerns lingered that money was poorly allocated.

Those fears were compounded by the nature of the debt; short dated loans often invested into medium and long term projects in sectors already bursting from overcapacity.

Estimated at 77.9 trillion yuan, non-financial corporate debt grew an annualised 24 per cent between 2008 and 2014, equal to more than half of all outstanding debt in China, which as of late 2014 was around 220 per cent of GDP, BNP Paribas economists calculated. Some 66.6 trillion yuan of this debt was issued to state owned enterprises.