Shadow Banking systems woes in China.

Looks like everyone's out to prove that China is going to be the next big tremor to rock the boat that is the world economy. And the origin point of choice for nearly all of them is the country's shadow banking system. Take this latest article on Bloomberg for example. It talks about how a credit risk measuring metric is hitting new highs perhaps indicating that credit risk and leverage have reached levels in China that are not sustainable. And the worst part is that the shadow banking system is out of reach of the conventional central bank policies as most of it is underground. So even if the Chinese central bank were to take some measures to curb the risk, there's no guarantee that the risk will go away. Besides, the measures that have so far been taken are very tiny compared to the size of the economy. Consequently, there's a great deal of uncertainty out there. One way to deal with this is to closely monitor which way US treasuries head. If they go higher, then there's flight to quality for sure; which in turn would mean further worsening of the Chinese situation.