Real test is still to come

Problems of property and debt are being exaggerated, China's economy is fundamentally sound but needs adjustment

Bearish sentiment about the Chinese economy has surged in recent months, owing largely to three conjectures. First, China's housing market is on the brink of collapse. Second, China's fiscal position will worsen rapidly because of massive local government debt. And, third, the collapse of underground credit networks in cities such as Wenzhou, Zhejiang province, will lead to a broad financial crisis across the country.

In fact, despite its problems, China's economy remains on course and it is not yet anyway near to hitting the rocks.