Debt reform takes a lower priority to stabilizing growth

However, another school of economists think differently. They contend that the current mix is just a temporary collection of counter-cyclical policies. They doubt that a painful deleveraging process, rife with defaults and bankruptcy, is necessary or feasible in China.

Helen Qiao, chief greater China economist at Morgan Stanley, said Chinese policymakers' plan is to focus on growth, in the hope that a larger economy will reduce the relative weight of the debt. The danger of forceful deleveraging, she said, is that when debt contracts, GDP also does－sometimes even faster.

"We used this very approach to emerge from the 1997-2002 difficult period."

Sounds like an explanation that both camps can grudgingly accept. But is it feasible?

Tom Orlik, a Bloomberg economist, noted that nominal GDP growth, which is a proxy for return on investment, fell to 5.8 percent in the first quarter from 8.5 percent in the third quarter of 2014.

"With potential returns falling faster than the cost of credit, it's no wonder businesses aren't clamoring to borrow," he said.

Comparing the growth of credit and GDP in China, it is difficult to envision that Qiao's approach will materialize. Outstanding renminbi loan expanded 14 percent in the first quarter, while GDP expanded just 7 percent.

Can GDP growth catch up with credit expansion? If not, we will probably see the debt ratio keep rising. The stake is being indulged in the "expedience" and refrain from a painful reform agenda.