China’s rise often seems so inevitable it is easy to overlook the obstacles in its way.

The big short-term risk is from asset bubbles. The monetary stimulus of the past two years, combined with rising wages, has left China vulnerable to a bout of inflation – or worse. Given high savings levels and a lack of investment options, today’s negative real interest rates create a threat of speculative excesses by domestic investors. Property is at particular risk but in recent months there have been big jumps in the prices of Chinese art, medicinal herbs and garlic.

“If China can successfully prevent the formation?of?an asset bubble, we have a 60 to 70 per cent chance of sustaining economic growth in the future,” says Fan Gang, a former central bank adviser. Put another way, there is a 30-40 per cent chance that it cannot.