Given the domination of bank financing, nonperforming debts (NPDs) in large Chinese enterprises are a proxy for nonperforming loans (NPLs) in China's major banks. Using a firm-level survey of more than 20,000 large and medium-sized industrial enterprises conducted by the National Bureau of Statistics of China, this paper estimates both the level and ratio of NPDs across ownership type, industry, and region for the period 1995–2002. The results show that NPD ratios have been falling since 2000 as a result of the rapid expansion of better-performing non-state enterprises (NSEs), the improved performance of state-owned enterprises (SOEs), and the exit of poor-performing enterprises (which has been facilitated by asset management companies and other merger and acquisition activities). SOEs, however, are still much more likely than NSEs to generate NPDs. This paper provides useful tools and sector information for assessing enterprise debt risks and draws lessons for banking reform in China.