IN MOST respects, double-digit growth is a relic of the past for China. In the third quarter the economy grew by just 6.9% year-on-year according to official data, and probably by a percentage point or two less in reality. Yet bank loans increased by 15.4% in the third quarter compared with the same period in 2014. Having released a torrent of credit to buoy the economy during the financial crisis, China was supposed to have started deleveraging by now. Instead, banks are continuing to pump debt into the economy, while the authorities, apparently worried about the damage a contraction in credit might do, coax them on. Growth in credit has at least slowed in recent years. A broad measure is “total social financing” (TSF), which encompasses bank loans, corporate bonds and a range of shadowy loan-like products. TSF growth soared to 35% in 2009 when the government called on banks to open the taps and support the then-faltering economy. It has since decelerated: it rose by 13% in the third quarter from a year earlier. The problem, though, is that nominal GDP growth has fallen much lower, to 6.2%.

This means that China’s overall debt-to-GDP ratio is continuing its steady upward march (see chart). Debt was about 160% of annual output in 2007. Now, China’s debt ratio stands at more than 240%, or 161 trillion yuan ($25 trillion), according to calculations by The Economist. It has risen by nearly 50 percentage points over the past four years alone, with slowing growth only serving to magnify indebtedness.

A rapid increase in debt in a short space of time has historically been a good predictor of financial trouble, from Japan in the 1990s to southern Europe in the 2000s. But there is no level that automatically triggers crises. Since most of China’s debts are held within the government-controlled bits of its economy (state-owned firms are the biggest debtors and state-owned banks their biggest creditors), the country has the means to avoid an acute crisis. It can, in effect, roll over bad loans as they come due or abstain from calling them in. However, although that spares the economy short-term pain, it leaves it with a chronic ailment. Ever more credit is needed to sustain growth. Loans that should have gone to sprightly companies with promising new ideas go instead to corporate zombies.

There are worrying signs that China is heading in this direction. In the six years before the global financial crisis, each yuan of new credit brought about five yuan of national output. In the six years since the crisis, that has fallen to just over three yuan. It is not hard to find examples of companies on life support that in other countries might have perished by now. In September China National Erzhong Group, which makes smelting equipment, received a bail-out from its parent. Investors in Sinosteel, a metals conglomerate, are now hoping for the same after it delayed payment on a bond this week.

It is not too late for China to bring its debts under control. Regulators have taken steps in the right direction. They have obliged local governments to provide better data on their debts and have forced banks to bring more of their shadow loans onto their balance-sheets, providing a clearer picture of liabilities. One reason that banks have been issuing loans so quickly this year—faster than overall credit growth—is that they are replacing shadowier forms of financing. China has also used both monetary easing and a giant bond-swap programme for local governments to reduce the cost of servicing debts. The weighted interest rate on existing liabilities has fallen from roughly 6% to 4.5% this year.

But some worry that these measures are just pushing risks elsewhere. A bond-market boom is the newest concern. Net bond issuance in the first nine months of 2015 reached 8.7 trillion yuan, up 67% from the same period a year earlier. At the same time, the gap between funding costs for companies and the government has narrowed sharply. The one-year yield on government bonds has fallen by nearly a percentage point over the past year, whereas corporate yields have fallen by 1.5 percentage points. In other words, investors are lending to companies as if they were becoming safer borrowers, even as their liabilities increase. Yang Chen of Bank of America Merrill Lynch notes that some investors are buying bonds with borrowed cash, believing that the government will wade in to spare them from any big defaults—as it has done in the past. If that impression persists, China’s debt mountain could grow bigger still.