Edmund Conway says that the country’s leaders risk creating the same type of asset bubble that floored Japan.

Every economist has a favourite fact about the Chinese economy. Mine is this: every month the country generates so much surplus cash from trade that it could afford to go out and buy three of Britain’s biggest companies – say, British Telecom, Rolls Royce and J Sainsbury. Every single month.

The £9.8 billion that Kraft proposed this week to spend on Cadbury’s? China could have generated that much in little over a week – not funny money, but cold hard cash. Should it decide to go out and spend, it could afford any company it wanted – Google, Goldman Sachs, RBS. Only, it has more sense.

Or does it?

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