It is no secret that China has used its banks like credit cards to finance an infrastructure spending spree in recent years. So the bet for investors going long on Chinese banks has been straightforward: that, like credit card companies the world over, the lenders will rack up profits from hefty interest margins far outweighing any losses from defaults.

However, reports in the past two weeks about the true debt load of local governments have exposed the inherent risk in this bet. Could the massive Chinese “credit card” bill go unpaid, leaving banks with a pile of bad loans and depressed earnings for years to come?

As if to underline that fear, a series of prominent investors have cut their holdings of Chinese bank shares in recent days. Temasek, the Singapore state-owned investment company, sold shares in two of China’s big banks for $3.6bn. The National Social Security Fund, which manages the Chinese pension plan, has also trimmed its bank stakes, according to state media reports.