A complicated drama is unfolding among three major Chinese firms that have invested in each other, highlighting wider concerns over the country's growing debt problem.

The recent events, which also loop together longstanding financial system issues like accounting trickery and overspending, are continuing to weigh on investor sentiment — even though China's second-quarter economic growth beat analyst expectations on Monday.

"The Chinese market fell [Monday] despite the solid second quarter growth because of policy signaling from the central government that the efforts to mitigate financial sector risk through regulatory crackdown and deleveraging will continue," said Todd Lee, senior director of economics at IHS Markit.

Here's a breakdown of the soap opera drama and how the complicated relationship between Dalian Wanda, Sunac and LeEco means woes at one firm could ripple to the others.

Dalian Wanda

Wang Jianlin, who founded private Chinese conglomerate Dalian Wanda, had big dreams of building a global entertainment and property company. He'd splashed out at a time when the Chinese government was implicitly a fan of overseas mergers and acquisitions — seen as a way to increase China's clout — buying up Hollywood studio Legendary Entertainment and movie theater chain AMC Entertainment. Those names boosted an already robust portfolio of theme parks and hotels in China.

But massive capital outflows prompted the government to crack down on the shopping spree abroad, and scuttled deals like Wanda's $1 billion move to buy Dick Clark. The latest reports indicate that Beijing is now scrutinizing loans to Wanda in efforts to assess debt risk, something that has also impacted other major firms that splashed out overseas.

Last week, perhaps in hopes of preventing greater scrutiny, Wanda sold off a spate of its hotel and theme park assets to Chinese property developer Sunac for $9.3 billion. But an unusual quirk of the deal is that Wanda is lending nearly half of the total sale figure to Sunac in order to close the deal. Sunac is also meant to take on all loans associated with those assets, but neither company has clarified how much leverage was involved.

On Monday, S&P Global Ratings put two Wanda subsidiaries — Wanda Commercial and Wanda HK — on watch negative as a result of its unexpected asset disposal to Sunac.

Wanda-owned AMC Entertainment (NYSE: AMC) tanked 10 percent in New York on Monday.

Sunac

Sunac (Hong Kong Stock Exchange: 1918-HK) is now taking on a bunch of those Wanda assets, a move that continues the company's trend of extending lifelines to troubled companies. It's happened so much there's a circulating market joke in China: After all the typical company financing rounds, there's a final "Sun Hongbin funding round" named for the founder of Sunac. As such, questions are swirling over just how much risk the company has taken on.