Facile to call China's economy a Japan-style financial 'bubble'

CHINA, say an increasing number of commentators, is now dangerously deep in debt and rapidly inflating its way towards its own version of Japan's late-1980s "bubble economy", from where it is supposedly fated to suffer a "lost decade" or more of economic stagnation.

Yet, this argument just does not stand up to analysis and, like numerous "China crash" theories that have gone before (such as when the Shanghai stock market plummeted a few years ago), it seems to be premised more on a kind of perverse wishful thinking than on fact.

China is heavily in debt, it is true, although at 265 per cent of GDP or gross domestic product (according to the Institute of International Finance or IIF) the country's total debt is well below the world debt to GDP ratio of 325 per cent, and far less than the 390 per cent of debt to GDP in mature economies.