Remember high- growth woes amid low-growth worries

INVESTORS might be scared of slow global growth and deflation. But growth isn't everything. Just ask China, where ballooning debts were putting it on the path of spectacular collapse. Or Singapore, which is still trying to reduce its reliance on the cheap foreign manpower that has powered its growth.

In China, rampant credit use has stoked sky-high inflation, even as state-owned banks kept interest rates for depositors low. Investors became desperate for returns. They poured their life savings into property and shadow-banking wealth management products. Shadow banks in turn were a ready source of funds to companies engaging in infrastructure, property and mining projects, not all of which made economic sense.

A strategy of pursuing growth for its own sake has ceased to make sense for China. It is deliberately slowing down its economy by clamping down on corruption and credit. Yet investors behave as if this is a bad thing. Like China, Spain had a housing and construction boom. Unlike China, the bubble burst. Spain has suffered a 50 per cent unemployment rate for under-25s and a 25 per cent overall unemployment rate. Financial stability for an entire generation has been lost.