As a non-expert, it seems likely that of the 3 options, wealth transfer will be the main solution to China's debt problems. (It's worth noting, China's high corporate debt levels are, like Japan's, owed to mainly to domestic creditors, and I believe also denominated in the local currency.)

In a totalitarian dictatorship, "political opposition from so-called vested interests" is not that strong a barrier when political and economic stability is at stake.

I think while some unsustainable debt will continue to be allowed to default, a lot of debt will eventually be painfully bailed out by taxpayers (both households and corporations) over time.

This mean lower health, education, and social welfare spending affecting people who didn't cause the debt problem in the first place. That's just the unfortunate price of accumulating large amounts of non-productive debt.