So is the question how do these loans appear on China's central bank's balance sheet?

I am confused by reading this article: if part of the issue in the US is that China holds vast amounts of US debt, and now China is also highly leveraged, then who is left holding their debt?!

What would be to problem with the Chinese central bank just writing off all the debt?

I can see that the spending pattern may be unsustainable, but if you have been lending the money to yourself there is no-one left to be upset when you default.