As with most of the world economies, China is dealing with a growing debt problem, but the continuing use of shadow banking is causing more harm than good. Over the past few years the number of unregulated loans, investments, and financial products, has doubled. The value of this so called shadow banking industry is expanding and currently sits around 70 percent of China’s total GDP; upwards of 35 trillion yuan. There are several risks that this form of banking carries and the question that most economists and analysts are wonder is, how much of this capital must be covered by the national government. As the economy slows and businesses and local governments still have debt obligations many of them turn to shadow banking, with sometime exorbitant interest rates, to service their prior debt payments.