Six months ago the Asian economies were among the hardest hit in the world, as exports to the rich world plunged South Korea’s GDP grew by almost 10% (though it is still down 2.5% on a year earlier); Singapore’s soared by 20% (3.7% down on the year). China does not publish quarterly figures, but economists think its GDP jumped by an annualized 15-17%.

Apparently much of the growth is due to huge stimulus packages. None greater than China. In addition to the reported government $588 billion there have been bank loans three times the normal rate at $1.2 trillion. This enormous boost that China’s rebound is giving to business and consumer confidence across the Asia.

Still there is a problem for Asia. Although the demand for exports to China is fueling a great deal of the regions rebound, 60% of the region’s exports eventually end up in the rich world. The consumers in the rich world show no signs of buying.

It finally leaked out that prosecutors in the southern Chinese city of Guangzhou allege that Wang Sheng, former chairman of Canton Properties, a prominent developer in southern China, obtained about Rmb4.8bn ($702m) of illegal loans from Bank of Communications, a state-controlled lender 18.6 per cent owned by HSBC.

This fraud was perpetrated before 2007. The eye watering number of close to a billion dollars is a bad omen for the future. Even the PBOC has warned that parts of the wall of money that is coming out of Chinese banks has ended up in the equity and real estate markets. Much of the rest will end up as non performing loans or simply be stolen.

Hopefully for Asia, before the Chinese bubble bursts, western consumers will start to consume again. Either way, there will not be a happy ending for China’s financial system.