Corporate investigator Violet Ho never put a lot of faith in the numbers on bad loans that are reported by China's banks.

Crisscrossing provinces from Shandong to Xinjiang, she has seen too much — from the shell game of moving assets between affiliated companies to cover-ups by bankers who are loath to admit that loans they made won't be recovered.

"If I have one piece of advice for people worrying about the financial status of Chinese companies, it's this: It's right to be worried," said Ho, senior managing director in Hong Kong for Kroll Inc., a U.S. risk consultancy. "Often a credit report for a Chinese company is not worth the paper it's written on."