The Achilles Heel of the Growth Model

An awful lot is widely misunderstood about the Chinese economy by people outside the country, he says. Unsustainable increases in debt have always been the problem with this kind of growth model, Zhang adds. The huge amount of foreign reserves is seen by many as conclusive proof that China is in a very, very strong position and doesn't have a debt problem. Very high levels of reserves are historically associated with greater domestic banking stability, not less banking stability.