I've just returned from a wonderful two-week trip to China and I defy anyone who visits this vast country not to return brimming with confidence in the future. I did – even though the local stock markets tanked during my stay.

While I was there, I wanted to look at the wider macroeconomic picture – and for this my guide was US economist Michael Pettis. He is a finance professor at Peking University's Guanghua School of Management, as well as being chief strategist at Shenyin Wanguo Securities in Hong Kong, and author of the China Financial Markets blog at www.mpettis.com.

At the core of his argument is this simple idea. China is expanding at a rapid rate, fuelled by cheap credit and massive government spending on infrastructure. This massive increase in output and capacity must be paid for in some way – and the real cost is to consumers who don't receive a fair return on their savings because interest rates are kept artificially low. So every time you travel on one of China's impressive new high-speed trains, you're actually travelling on a fiscal black hole! )