12 The answer is that China probably cannot continue to rely on export-led growth, and therefore that the switch to domestic demand led growth, which has been talked about for some time, is essential if growth is to continue in the 7-10 percent per annum range. Is China vulnerable to a 1990s style Asian financial crisis? There are some negative symptoms.
The first is a share of investment in GDP that according to the official data exceeds 40 percent. This cannot be efficient, it must be part of the process of generating bad loans, and is reminiscent of pre-crisis investment rates in some of the Asian crisis economies. The second is a financial system that remains weak.