As September approached, no one was feeling good about the economy. Stock markets across the globe had experienced double-digit declines, wiping out any gains for 2015. This time, the pundits can blame both the US Federal Reserve — which seemed likely to increase short-term interest rates, ending almost seven years of quantitative easing that expanded its balance sheet by more than US$3 trillion — and China, whose economy has slowed significantly amidst a basketful of bubbles, in pursuit of an illusory wealth effect designed to wean the world’s second-largest economy off its investment- and export-driven model to a consumer-driven economy.

A review of my past writings reveals the recipe for events unfolding in China today, which, in turn, are contributing to the current global market chaos. What impact is China likely to have on the global economy and financial markets, and what tools does China have at its disposal to ease the pain or, economically speaking, orchestrat