My involvement in financial crises over several decades has taught me that the longer governments wait to take tough decisions the more difficult it is to stem the tide and curb the ensuing increase in losses.

China’s leaders now need to recognise this reality as they confront escalating risks across the financial landscape. Further delay in acting boldly will undermine domestic and international confidence in their economic management skills: in the short term it will prompt increasing capital flight, while ensuring lower medium-term GDP growth.

Paul Volcker faced a major economic crisis when he took the helm of the US Federal Reserve Board in 1979. To curb roaring inflation he decided to confront the dragon with exceptional monetary policies. One consequence was a recession. But it was short, the dragon was slayed and the American economy was set on a sustainable and substantial growth path.