It is unlikely that anybody in China has any idea just how much of a mess they have on their hands. Local governments have every incentive to hide the full scope of their borrowing from central authorities — and local banks and businesses often have excellent reasons for helping the local authorities to hide their tracks and borrow and spend still more.
You don't have to believe China is doomed to believe that they are not immune to normal economic problems that other countries face. Past performance is no guarantee of future earnings, eh?
UPDATE: The village appears to have won:
A Chinese village protest that tested the ruling Communist Party for over a week ended on Wednesday after officials offered concessions over seized farmland and the death of a village leader, in a rare spectacle of the government backing down to mobilized citizens.
When the world's attention fades, the villagers will suffer once more for their crime of opposing the government. The problem isn't that the government made a bad decision. The problem is that decisions are made by a bad government.
