These will ultimately be repackaged as long-term bonds and sold, via banks, to institutional investors such as pension funds and insurance companies, including outside China, says Tinker. "They'll take that toll road, take the income from that toll road and staple it to the debt," said Tinker during a visit to Australia. "And then they'll turn what is currently a two-year revolving special-purpose vehicle into a 10, 15, 20-year infrastructure bond," he said. "Probably the best way to think about the debt in China is that these are going to transform into long-term assets for people who want to build their pension funds in China. "And those assets will be available to people who already have pension funds in Australia," he said.

His comments come amid a range of reports warning of mounting corporate and government debt in China. Although less than the average for developed countries, the key ratio easily beats the emerging world average of 175 per cent, according to recent analysis by Oxford Economics. Citi has also warned several times that China's rising debt amid slowing growth threatened to push the world into recession. Oxford Economics is less alarmist, agreeing with Tinker that much of the debt has been sunk into capital stock that will pay for itself. The problem, it says, are in sectors such as heavy industry and manufacturing where returns on investment have been declining.

The refinancing of so-called "zombie companies" in steelmaking and other heavy industry also has commodities exporters such as Australia concerned about future demand from the world's biggest consumer of raw materials. "These financial indicators are also problematic in the real estate sector – property developers – and a bit less so in construction," wrote the think tank's head of Asia economics Louis Kuijs in a recent research note. Sharp falls in the Chinese stockmarket and currency last year triggered global panic as investors began to fear a "hard landing" for the economy. Tinker concedes that China's economy is slowing, and that the country has "some problems". He says about half of China is "growing at 12 per cent, and the other half at zero". Nor could the debt load be ignored, although China was not exposed to the currency and premium risk of other emerging markets.

"I'm not dismissing the fact there's a lot of debt, but there is not the liquidity risk associated with debt," he said He said the gradual opening of the capital markets – including one of the world's biggest government bond markets – would foster efficiency in the financial system, improve the allocation of capital to productive assets and at the same time widen the options available to Chinese savers and foreign investors. Investors, for their part, had to largely forget about the companies and sectors that did well out of China's investment and infrastructure boom and get on board those benefiting from the growth of the middle classes, said Tinker. "The statistic that really grips me at the moment is that there are 375 million people in China who are already middle class, who have a disposal household income of $US30,000 a year, and they're spending it in increasingly Western ways," he said. "First they chase and buy everything, and now they're being more selective: they are more interested in experiences, in leisure, tourism, health and education."

In Australia, he mentions Sydney Airports and Treasury Wines as two listed stocks that will benefit from what he describes as "China 2.0". Examples abound, and not just in Australia, despite its obvious attractions as a gateway market for other foreign investors trying to get a piece of China. Axa-Framlington has just opened a pan-Asian equity income fund that will seek to reflect just that, with a mix of companies from China, Australia, Indonesia and anywhere else in the region, which is tapping into the China transition. "What you mustn't do is come up with a theme and shoehorn an inappropriate company into it," he said. He said the pace of technological disruption, particularly in China, would also guide investment decisions.

"In 10 years' time, half your portfolio could be something that doesn't even exist today. "And most of it will be Chinese," he said.