So why do I say this is not a threat? For China, it most certainly is. Indeed, some form of financial crisis is now pretty much pre-cooked. Yet because China is still a largely closed economy, with stringent capital controls, the effects of a big Chinese credit event on the rest of the world are unlikely to be particularly seismic. There will be no capital flight or financial contagion. You won’t see the same lightning rod effect on global trade as observed with Lehman Bros. This will be a Chinese affair, not a global one. Only those joined at the hip to Chinese growth – natural resource countries such as Australia, and, to a lesser extent, big manufacturing exporters like Germany will be badly affected by it.