China has launched perhaps its most concerted push yet to clean up a toxic brew of unregulated and risky lending increasingly viewed as a threat to global financial stability, but do authorities really mean business this time?
Analysts don't think so.
China's addiction to debt-fuelled growth powers the steady economic expansion that the ruling Communist Party craves, and it won't go cold turkey, they said.
"These things come in waves. It's like 'well, this time we mean it.' But to be blunt, I would fully expect them to essentially retreat," said Beijing University economics professor Christopher Balding.
"At the end of the day, economic growth is the priority."
Fears are mounting that China is flirting with a potential disaster worse than the US subprime collapse and subsequent 2008 financial crisis, and Japan's 1990s asset-bubble meltdown and resulting "lost decade."
The numbers are staggering.
Moody's Investor's Service estimated in October that China's "shadow banking" sector -- off-balance-sheet lending that evades official risk supervision -- totalled $8.5 trillion, or nearly 80 percent of its GDP. It surged by an additional $297 billion in the first quarter of 2017, according to a Bloomberg analysis.
A poorly regulated asset-management industry that has funnelled cash into risky investments tripled in size in just three years to reach $3.8 trillion last year, according to various estimates.
China had overall debt liabilities equal to 264 percent of GDP in 2016, Bloomberg Intelligence said, yet lending is chugging ahead despite fears of a bubble in the crucial housing sector.
- 'Absurd level' -
The situation has reached "a level of absurdity in China that the planet has never seen," said Anne Stevenson-Yang, research director at J Capital in Beijing.
Without aggressive action, "the top one percent will be multi-billionaires and the rest of the country will be squatting in empty buildings by trash fires and foraging for food".
The IMF warned this month that Chinese debt crisis could "imperil global financial stability".
China has vowed to clean house.
New banking regulator Guo Shuqing, installed in March, has issued what official Xinhua news agency called a "regulatory windstorm" of directives this month.
They include measures to strengthen institutional transparency and chronically weak internal controls, tighten balance sheets, halt risky lending, and dispose of bad loans. Big fines have been meted out and corporate figures arrested.
Official heads have rolled too, including the country's insurance regulator Xiang Junbo, whose tenure coincided with a surge in speculative investments by Chinese insurers. He was sacked this month and faces a likely corruption investigation.
President Xi Jinping upped the ante Tuesday, calling for an all-out effort to tighten supervision, promote transparency, and identify "hidden trouble," Xinhua said.
The crackdown has rattled Chinese stocks, with Shanghai's key index sliding nearly five percent since April 11, surrendering all of its gains for the year.
Beijing probably felt it was safe to act now due to unexpectedly strong first-quarter economic growth, analysts said, but it faces a precarious balancing act.
The Communist Party holds its twice-a-decade congress later this year, a politically sensitive event during which the leadership avoids aggressive actions that could imperil all-important economic growth.
Longer-term, China needs steady growth as it transitions from an investment- and export-fuelled economic model to one based on domestic consumption.
"Once economic growth starts to dip below expectations or goes down, regulators will ease up again," said Chen Zhiwu, a Yale University finance professor.
- Clock is ticking -
Michael Every, Rabobank's head of Asia-Pacific financial markets research, said China is "having (its) cake and eating it."
"China wants markets. And it wants stable markets. And it wants less borrowing. And it needs more and more borrowing to grow at the rate it deems necessary. Something has to give," he said.
China remains well-equipped to manage shocks. The government's control over banks, foreign exchange and capital flows allows it to browbeat institutions and channel funding to address problems.
It is believed to be considering merging banking, securities and insurance supervision into a new "super regulator" to plug oversight cracks.
But, perversely, its clampdown could be worsening things, driving more money into back-alley deals to avoid the new strictures, say experts who point to the first-quarter surge in "shadow banking".
The clock is ticking, said Michael Pettis, former head of emerging markets at Bear Sterns.
"At this rate it will take them 10 to 15 years to get to a reasonable level and they clearly don’t have 10 to 15 years," Pettis recently told Bloomberg Television.
"They may have three years, perhaps four at most, in terms of the debt."