The impending fall of China has been confidently predicted for at least two decades. Despite its apparent inevitability, however, 2016 was still not the year that China’s economy failed. January’s precipitous stock market tumble did not foretell the implosion of the broader system. Yet as the year draws to a close, the ever-expanding debt pile that has long concerned the China bears is showing real signs of stress.

Relatively speaking China’s debt burden is not incongruously large. At 255 per cent of GDP, according to the Bank for International Settlements, it is lower than the euro area at 271 per cent and Japan’s 394 per cent; the US comes in just below China. The rate of growth, however, has been remarkable — at the end of 2008 China’s debt was just 147 per cent of GDP. And China itself is worried. In May, official media highlighted the risk of a financial crisis stemming from high levels of corporate debt, which accounts for more than half of the outstanding credit. The International Monetary Fund registered its concern in June. So far, China has struggled to improve the situation; bankruptcies remain rare.

The most pressing concerns over debt stem from the household sector. Citizens spooked out of equity markets earlier this year were enticed into high yielding wealth management products, which reinvested cheap borrowings into high yielding debt to deliver returns. This worked well — until the government began to tighten liquidity. China’s recent clampdown on capital flight has had the side-effect of a liquidity squeeze; banks that had been lending to WMPs began to call in their debts. Meanwhile, November’s strong economic data and the US’s rate rise suggest that more tightening may be on the cards for China, too.