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Imagine it’s 2023. China’s consumption binge – fuelled by a run-down of household savings – eases, triggering fears over global demand. The US’s increasingly export- and investment-led growth model comes under pressure. Chinese government bonds – the risk-free global benchmark, along with US treasuries – tumble to a record low amid safe-haven buying.
After the death of China’s resolutely export-led growth model, which was fuelled by excessive consumption in the US, Beijing delayed the inevitable day of reckoning through a credit-driven investment bubble in 2008, which started to burst from 2013.
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