Finally, Chinese leaders have admitted what the market has been saying for some time: defaults by Chinese borrowers are all but inevitable, possibly on a significant scale. Responding to questions at a news conference last week, Li Keqiang, the Chinese premier, admitted that “isolated cases of default will be unavoidable”.

Few are likely to share Mr Li’s optimistic view that only “isolated cases of default” will occur. Still, by speaking publicly of the possibility that investors will suffer losses on credit products, he indicated that Beijing may be ready to face the consequences of its decision to prop up growth with credit-fuelled investment. In the past five years credit has grown at an average of 20 per cent a year, more than double the average rate of economic growth over the same period. An astonishing $14tn of new credit has been extended since 2008. Much of this has been spent on building fixed assets such as infrastructure, real estate and factories.

Unfortunately a large portion of this investment – it is impossible to say how much – has been squandered on speculative property ventures, useless infrastructure and excess manufacturing capacity. To make matters worse, inadequate financial regulation has allowed borrowers of doubtful standing to gorge on a seemingly endless flow of loans.