4.Money—and lots of it

China has more than $15 trillion in bank deposits and that figure grows by $2 trillion every year. Foreign exchange reserves total $3.5 trillion. China is the single largest foreign purchaser of US government debt, and its yearly trade surplus with the US has grown from zero in 1985 to more than $300 billion in 2012. China’s banking and financial ecosystem is moving large amounts of money with increasing efficiency and sophistication.

In 2003, bank lending accounted for more than 90 percent of Chinese finance; in 2012, it was 50 percent. A large lending market outside the formal banking system has emerged, complete with underground finance, off-balance sheet lending, and wealth-management products that pool investors’ money and invest them in various projects.