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The large scale of  local goverment debt and capital inflow are the two main causes undermining China's macroeconomy.

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This article proposes that the local government debt presses no immediate threat on the basis that macro economic policies are suitable and the property market keeps going. Local government financial vehicles are not expected to default in large numbers because they can get new fund by way of credit or bonds.
Authoritative data came from Audit Commission’s National Audit, saying that the total number of LGFV outstanding at end-2010 was 6 576 and LGFV debt balance was 10.72 trillion yuan, of which bank loans accounted for 8.47 trillion yuan. The debt ratio stood at 70.45%.
Data from other institutions seem distinctive. The People’s Bank of China said there were more than 10 000 vehicles being monitored at end-2010, accounted for less than 30% of all yuan loans. The China Banking Regulatory Commission pointed out the mid-term LGFV loans balance stood at 7.66 trillion yuan as of June 2010 in a conducted meeting. In addition, according to Audit Commission’s report, 1.1 trillion yuan was yet to be spent at end-2010, putting actual debt expenditures at 9.6 trillion yuan.
Considering above figures comprehensively, it is estimated that LGFV loan stood at 8 trillion to 10 trillion yuan. Taking other forms of local government debt into account, the overall debt balance might stood between the range of 10.3 trillion to 12.3 trillion yuan. Adding the 6.7 trillion yuan central government debt into the figure, the total government debt balance would have been 17 trillion to 19 trillion yuan. Divided by 39.8 trillion yuan GDP, the debt ratio was about 45.2%, well below the standard of 60%.
Among the LGFV debt amount, only 5.88 trillion yuan needs to be repaid. Divided by total of 10.9 trillion yuan local government finances, the debt ratio on the local government level is 53.9%, not so much as 70.45% pointed out in the Audit Commission's report.

Go on to keep the important ratio under control, then the risk can be lowed to the minimum level

Many investors have long eyed China's mountain of local government debt as a major risk. The worry is that slower growth in the world's second-biggest economy could set off a wave of loan defaults and hobble its banking system.

yeah , local government debt is a hot issue in our country, once I had shared an artical about that. How to deal with the debts? That is worthy to be thought-provoking. Of course ,the debt is used to built the fudemental constructions and infrastructures, some parts for improve farmers' welfares.
      In our country, mcroeconomies are  designed and coordinated by the government.  Make measures to prompt the development from an overall consideration. In my opinion, our national is sensitive to the debt crisis. They can't borrow the money beyond their abilities to repay. They often avoid turmoil or chaos when making measures.That suits our traditional  concept. So I believe the debt ratio in our country must be in a manageable level all the time.
       The most important ,we should keep the confidence to defeat the plight. There is no deny that "We have a bright future"

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The number is not the core of   the problem,but the quality of  the economic growth. In the past 33 years,wo got great progress as  the  GDP figures showed .However, I still want to ponder on how much  the price we paid for.  Moreover, LGD is just an aspect of  the whole  macro-economic problem,we neen someting  more to deeply thinking.

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主要还得看这些地方债务资金的去向。

The debt to GDP ratio is not a good standard in China because the GDP is very concentrated in some industries. The local government loans should be mostly on real estate which has low liquidity and does not have high demand in small cities. Also, I do not know why the auther said the default probability is very small. With the low-liquidity-assets and low diversification, the 10 trillion yuan debt is touching the siren at any time.